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Full text of "Personnel management"

UNIVERSITY 
OF FLORIDA 
LIBRARIES 




MML SCIENCES ROOM 



Digitized by the Internet Archive 
in 2013 



http://archive.org/details/personnelmanageOOjuci 



\ 



EDITORIAL COMMITTEE 



THE IRWIN SERIES IN INDUSTRIAL 
ENGINEERING AND MANAGEMENT 



M. R. LOHMANN 

Vice-Dean, Oklahoma Institute of 
Technology of Oklahoma A. & M. College 



JOHN F. MEE 

Chairman, Department of Management 
Indiana University 




THE IRWIN SERIES IN INDUSTRIAL 
ENGINEERING AND MANAGEMENT 

PERSONNEL MANAGEMENT 

Third Edition by Michael J. Jucius, The Ohio State University 

CASES IN MANAGEMENT 

By Henry M. Cruickshank, Stonehill College, and 
Keith Davis, Indiana University 

INDUSTRIAL MANAGEMENT IN TRANSITION 

Revised Edition, by GEORGE FlLlPETTl, University of Minnesota 

MANUFACTURING MANAGEMENT 

By Franklin G. Moore, Northwestern University 

THE WRITINGS OF THE GILBRETHS 

Edited by William R. Spriegel and Clark E. Myers, 

both of the University of Texas 

PRINCIPLES OF MANAGEMENT 

By George R. Terry, Northwestern University 



PERSONNEL MANAGEMENT 



Personnel Management 



THIRD 
EDITION 



1955 



BY MICHAEL J. JUCIUS, Ph.D, 

PROFESSOR OF BUSINESS ORGANIZATION 
THE OHIO STATE UNIVERSITY 



RICHARD D. IRWIN, INC. 

HOMEWOOD, ILLINOIS 



COPYRIGHT 1947, 1951, AND 1955 BY RICHARD D. IRWIN, INC. 

ALL RIGHTS RESERVED. THIS BOOK OR ANY PART THEREOF MAY NOT 
BE REPRODUCED WITHOUT THE PERMISSION OF THE PUBLISHER 



THIRD EDITION 

First printing, January, 1955 
Second printing, June, 1955 



Library of Congress Catalogue Card No. 54-12597 

PRINTED IN THE UNITED STATES OF AMERICA 



TO 

U.Y.J 
B. H. J 
B. A. J 
C.U.J 
E. G. J 



Preface 



The basic aim of the first edition of Personnel Management, published 
in 1947, and of the revised edition of 1951, was to supply the collegiate 
student with a realistic study of principles and practices of personnel 
management. And it was hoped that others, too, in various fields of, or 
related to, business might find value in it. 

To these ends, the fact was kept in mind that the average college 
student usually possesses limited business experience and a small but 
acceptable appreciation of the problems of business administration. 
Effort was bent, therefore, to provide him with materials which, with 
the aid of good college teaching, would serve to give him a reasonably 
clear and usable insight into the field of personnel management with- 
out belaboring him with excessive and mechanical details. The em- 
phasis was upon principles of personnel management, interspersed with 
digested descriptions of good practices and selected examples of gen- 
erally accepted solutions to common problems. 

The favorable reception accorded this text has been gratifying evi- 
dence that the basic assumptions upon which it was written and revised 
were correct. The preparation of the present, the third, edition has been 
undertaken with the same assumptions as guiding principles. Revision 
is again deemed necessary because, on the one hand, various users have 
kindly noted a number of changes in style, order of presentation, and 
emphasis which would serve to improve the text for the student and the 
instructor. These suggestions the author has accepted with gratitude, and 
they have been incorporated throughout the text. 

The need of revision has been suggested, on the other hand, in order 
to record changes in federal legislation, labor-management relations, and 
practices in personnel management. New interpretations, refinements, 
and revisions have been made in such basic laws as the Social Security 
Act, the Fair Labor Standards Act, and the Labor Management Relations 
Act. Labor-management relations show signs of change from warfare 
to maturing acceptance of each other's rights and responsibilities. The 
importance of such practices as programming, executive development, 
communications, and research has increased in the past several years. 
The recent contributions of psychology and sociology to interpersonal 

ix 



x PREFACE 

group dynamics have also been deserving of greater attention. And the 
developments in automation and atomic power have called for a re-ex- 
amination of the role of personnel management. 

With such significant changes in the making, the timeliness of this 
revision is apparent. Moreover, it was felt that some revision of the 
questions at the end of each chapter and the inclusion of new case prob- 
lems at the end of the text would serve to increase the student's under- 
standing of personnel principles and practices. To this end, some ques- 
tions are designed to review the specific materials of the text, and others 
to open new vistas whose exploration requires study of materials outside 
the scope of the text. 

The chapter outline is based primarily upon the broad functions 
which personnel management must perform in order to build an effec- 
tive working force. To begin with, however, attention is directed to the 
scope of personnel management, major factors in personnel problems 
and labor relations, and the organization of personnel work. Here are 
stressed the managerial functions, procedures, and relationships which 
are universally significant in personnel work. 

Attention is then turned to the major tasks of procuring, develop- 
ing, maintaining, and using an effective working team. Specifically, such 
detailed topics as specifying job and labor requirements, screening and 
interviewing employees, training employees and executives, evaluating 
jobs and employees, handling grievances and disciplinary cases, collec- 
tive bargaining with employees, and research and control of personnel 
functions are taken up. Much material in connection with these topics 
has been taken from industry, but pertinent examples in the fields of dis- 
tribution and office work were not overlooked. 

In regard to the detailed topics, the discussion is concerned with 
( 1 ) factors to be considered, ( 2 ) organizational relationships involved, 
(3) purposes to be served, (4) principles and policies to be followed, 
and ( 5 ) techniques, tools, and devices to be used. Of course, it has not 
been possible to establish absolute boundaries in the outline of the text. 
An important reason for this is that some functions, such as interview- 
ing, are related to a variety of tasks — for example, selection, guidance, 
and disciplinary action. Moreover, some problems, such as those of a 
morale nature, are widely ramified and may find their source in poor 
supervision and bring on such other problems as grievances. And, fi- 
nally, some devices, such as job analysis, have multi-uses and can be 
used in connection with training, job evaluation, and employee selection. 
Therefore, a certain amount of crisscrossing is inevitable, yet pedagogi- 
cally desirable. 



PREFACE xi 

Throughout the text, concern is felt for the problems which confront 
the personnel manager. The realistic and challenging nature of these 
problems is recognized. Were it not for the numerous problems which 
face him or which are likely to arise, there would be little need for the 
personnel manager or for the personnel function. Yet, the existence 
of such problems is not cause for pessimism. Indeed, when management 
is willing to face issues squarely rather than to seek to hide them, or to 
hide from them, it is a hopeful sign. As the challenge is met, the solu- 
tions will reduce the frictions which might otherwise lead to grave 
breakdowns. 

So the student in this field who seeks to serve the cause of better 
labor-management relations may best do so by preparing to tussle in- 
telligently with its problems and by avoiding a dissipation of his efforts 
in idealistic or wishful thinking. In these efforts, scientific personnel 
management has much to offer; and it, along with other specialized 
fields of human knowledge, constitutes one of the most hopeful avenues 
to the goal of better labor relations. 

It is to be expected that various teachers will desire to follow some- 
what different sequences of materials than that followed in the present 
chapter outline. There is no reason why those so inclined should not 
do so. For example, some might prefer to take up the materials on 
grievances earlier than presented in the text. Or the material on job 
evaluation and classification might be taken up after that on job require- 
ments. Such preferences are within the realm of personal choice; and 
such flexibility of arrangement is easily possible with the materials of 
this text. 

The author also wishes to note that there are details which this text 
does not cover. Times and conditions change too rapidly to be able to 
incorporate improvements being made in so many scattered locations 
and companies. Besides, it is felt that the teacher is in the best position 
to assay the latest developments as they occur and to use the best ones 
to spice his own lectures and discussions. Moreover, the author believes 
that an "encyclopedia" does not make for an effective textbook. But 
with basic good practices of the text, and a good teacher's zest, the stu- 
dent can be provided with an analysis, a personal touch, and a philosophy 
that no textbook can ever expect to achieve alone. 

In short, this third edition is offered as an adjunct to — not as a sub- 
stitute for — the good teacher. It is offered in the hope that his efforts of 
teaching will be more productive and satisfying to the student, and 
ultimately to those whom the student will serve. And it is offered with 
the understanding that times and conditions in the field of personnel 



xii PREFACE 

management will change, but always, it is hoped, for the better. 
It is impossible to list here all of those to whom the author is in- 
debted for aid in the preparation of the original and revised editions of 
this book. Among those who were of assistance, it is a pleasure to men- 
tion Professor Ralph C. Davis, of the Ohio State University, whose ideas 
on organizational and morale matters were invaluable; Mr. Cloyd Stein- 
metz, of the Reynolds Metals Company, who took time to give con- 
structive suggestions on a number of the chapters; Professor Frank 
Luken, of Villa Madonna College of Covington, Kentucky, who con- 
tributed a number of case problems from his store of business experi- 
ences; and the members of the Central Ohio Personnel Association, who 
provided unlimited access to their practical fund of personnel practices 
and principles. Thanks are also due to those who submitted critical read- 
ings of the earlier editions and to the large numbers of instructors who 
offered suggestions and comments for use in the revision. To all these 
the author expresses his fullest gratitude, while at the same time absolv- 
ing them of any connection with such shortcomings as the text may 
have. 

Michael J. Jucius 
Columbus, Ohio 
December, 1954 



Table of Contents 



PAGE 

TABLE OF CASES . . . . xix 

CHAPTER 

1. THE FIELD OF PERSONNEL MANAGEMENT ..... 1 



v 



7 



The Challenge of Human Relations. Problems of Human Relations. 
Scope of Personnel Management: Managerial Phases; Operative 
Phases of Personnel Work; Objectives. Responsibility for Personnel 
Management. The Personnel Executive. Education of Personnel 
Managers. 

2. A PERSPECTIVE OF PERSONNEL MANAGEMENT . 

Importance of Perspective. Historical Changes. Cultural and Soi 
Background. Technological Changes. The Role of Government, 
lations of Labor to Management. Concepts of Labor. Present AN 
Future Prospects: Approaches to Personnel Problems. Obstacles 
in the Path of Personnel Management. Factors Contributing to Bet- 
ter Relations. A Changing Philosophy. 

3. PERSONNEL PROGRAMMING 31 

Scope and Importance of Personnel Programming. Objectives: 
The Importance of Objectives. Classes of Personnel Objectives. 
Functions: Nature of Functions. Assignment of Responsibility. 
Personnel Policies: Nature. Example of Policies. Principles 
of Personnel Management: Nature. Suggested Principles. Ap- 
plication of Principles. Research Needs of Programming. 




\J 



4. ORGANIZATION STRUCTURE OF PERSONNEL MANAGE- 
MENT 50 

Importance of Organization Structure. Scope of Discussion. For- 
mal Types of Organization Structure: The Line Form of 
Structure. The Functional Form of Structure. The Line and Staff 
Form of Structure. Informal Aspects of Organization Struc- 
ture: Informal Executive Authority. Informal Employee Authority. 
Relation of Line and Staff Executives: Authority in Or- 
ganization Structure. Responsibility in Organization Structure. Re- 
lations of Authority to Responsibility. Factors in Specific 
Structural Designs: Tests of Good Structure. 



xiv TABLE OF CONTENTS 

CHAPTER PAGE 

5. JOB REQUIREMENTS 75 

The Hiring Function. Definitions. A Program of Specifying Job 
Requirements: Information to Be Gathered. Responsibility for 
Collecting Information. Methods of Gathering Data. Writing the 
Job Description. 

6. MANPOWER REQUIREMENTS 100 

Labor Requirements. Estimating Quantities of Labor: Steps 
in Estimating. The Sales Forecast. Production Schedules. Depart- 
mental Schedules. Determining Labor Needs. Available Labor and 
Payroll Changes. Labor Turnover. Man Specifications: General 
Approach. Physical Specifications. Mental Specifications. Emotional 
and Social Specifications. Example of Man Specifications. 

7. SOURCES OF LABOR SUPPLY 122 

Variability of Labor Supply Sources. Types of Labor Sources. The 
Internal Source. The External Source. Effect of Location of Plant. 
Evaluation of Alternative Sources. Layout and Location of Employ- 
ment Office. 

8. THE SELECTION PROCEDURE 142 

Major Stages. Initiation of Selection Procedure. Gathering Informa- 
tion about Candidates. Reports and Records. Induction of New Em- 
ployee. Summary. 

9. INTERVIEWING AND COUNSELING 166 

The Role of Interviewing and Counseling. Methods of Interview- 
ing and Counseling. Rules of Interviewing. Recording Results of 
Interviewing and Counseling. Evaluating Results of Interviewing 
and Counseling. Selecting and Training Interviewers and Coun- 
selors. Sample of Interviewing Instructions. Interviewing in Con- 
nection with Testing Programs. 

10. TESTS 187 

Popularity of Tests. Basic Fundamentals. Purposes of Tests. Types 
of Tests. Operating a Testing Program. Rules of Using Tests. 

11. TRANSFERS AND PROMOTIONS 207 

Scope of Transfers and Promotions. Purposes. Operational Aspects. 
Plan of Job Relationships. Selecting Candidates for Promotion. 
Records and Reports. Requirements of a Good Plan. Limitations. 
Seniority. Employment Privileges Affected. Area of Application. 
Summary. 

12. MERIT RATING 226 

Rating Programs. Objectives of Rating. Fundamental Issues of Rat- 
ing. Designs of Rating Forms. Rules of Rating. Checking Accuracy 
of Ratings. 



TABLE OF CONTENTS xv 

CHAPTER PAGE 

13. TRAINING OPERATIVE EMPLOYEES 250 

Training and Education. JUSTIFICATION AND SCOPE. COURSES OF 
Training: On-the-job Training. Vestibule Training. Apprentice- 
ship Training. Internship Training. Learner Training. Outside 
Courses. Retraining and Upgrading. FACTORS IN A TRAINING PRO- 
GRAM: Organizational Aspects. Planning the Program. Selection of 
Trainees and Instructors. Rules and Principles of Learning. EVALU- 
ATION of Training Programs. 

14. TRAINING OF EXECUTIVES 270 

Significance of Executive Training. Types of Executive Train- 
ing Programs : On-the-job Training. Understudy Plans. Role Play- 
ing. Training within Industry. Other Supervisory Programs. Posi- 
tion Rotation Plan. Multiple Management. Conference Training. 
Miscellaneous Types of Courses. Content OF Training. Follow- 
Up and Evaluation: Evaluation of Trainees. 

15. BASIC ASPECTS OF EDUCATION 290 

Scope of Education. Basic Considerations in Employee Edu- 
cation: Need of a Program. Factors of Education. Dynamic As- 
pects of Education. Measuring Educational Needs. MORALE: Scope. 
Theory of Morale Development. Important Considerations in Mo- 
rale Development. Steps in Developing Morale. Knowledge of 
Employees: Scope of Subject Matter. Inclusiveness of Programs. 
Measuring Attitudes and Understanding: Need of Measure- 
ment. Information Sought. Methods of Gathering Information. Re- 
porting Findings. Rules of Measuring Attitudes. ENCOURAGING 
Employee Expressions. 

16. THE EDUCATIONAL PROGRAM . . . 312 

Education of the Several Managerial Levels. Communication Con- 
tent and Conveyors. Rules of Education and Communications. Or- 
ganizing the Educational Program. 

17. REMUNERATION POLICIES 328 

The Problem of Wages. Availability of Measuring Devices. The 
Conflict of Interests. Scope of Discussion. Basic Issues: Ability to 
Pay. Cost of Living. General Theories of Wages: Economic 
Aspects. Legislative Regulations: Minimum Wage Controls. 
The Fair Labor Standards Act. The Walsh-Healey Act. The Bacon- 
Davis Act. Collective Bargaining Effects. Effects of Union Ac- 
tivities: Summary Remarks. 

18. JOB EVALUATION AND WAGE CLASSIFICATION ... 353 

Introduction. Organizational Aspects. Selection of Jobs to Be Eval- 
uated. Making the Job Analysis. Job Evaluation. Summary. 



xvi TABLE OF CONTENTS 

CHAPTER PAGE 

19. PLANS OF REMUNERATION 369 

Introduction. Basic Kinds of Plans. Tests of Wage Plans. Types of 
Wage Payment Plans. Group Plans. Remuneration of Salesmen. 
Executive Compensation Plans. Records. 

20. RELATED WAGE PROBLEMS 392 

Introduction. Time Problems: Variables. Daily Time Problems. 
Weekly Time Problems. Yearly Time Problems. Portal-to-Portal 
Issues. Stabilization Program: Job Stabilization. Individual 
Plans. Production Policies. Personnel Practices. Intercompany Co- 
operation. Governmental Influences. Wage Stabilization: Scope 
of Plans. Employee Coverage. Guarantee Periods and Amounts. 
Negotiated Plans. Examples of Wage Plans. Conditions of Feasible 
Usage. Unemployment Compensation. Programs of Revenue 
Participation: Profit Sharing. Employee Ownership of Stocks. 
Royalty Provisions. 

21. UNION-MANAGEMENT RELATIONSHIPS 418 

Labor Relations. General Background: Over- All History. Legal 
Changes. Concepts of Union-Management Relations: Defi- 
nition of Terms. Employee Representation Plans. Types of Labor 
Unions. Comparison of Craft and Industrial Unions. Comparison of 
Affiliated and Independent Unions. The Labor Management 
Relations Act: Rights of Employees. Rights of Employers. 
Rights of Unions. Coverage of the Act. Operations under the Act. 
Contractual Relationships: The Union Contract. Contract 
Clauses. Conclusion. 

22. HANDLING GRIEVANCES 441 

Employee Dissatisfactions. Basic Considerations: Meaning of 
Grievances. Implications of the Definition. Machinery for Handling 
Grievances. Steps in Handling Grievances. Principles of Handling 
Grievances. Management's Attitude toward Employees. Manage- 
ment's responsibilities. Long-Run Principles. Joint Handling OF 
Grievances: Grievance Machinery. Arbitration. 

23. DISCIPLINARY ACTION 465 

Introduction. Definition of Terms. Procedures of Disciplinary 
Action: Statement of Problem. Gathering Facts. Establishing 
Tentative Penalties. Types of Penalties. Choosing the Penalty. Ap- 
plying Penalties. Follow-Up of Disciplinary Action. Principles of 
Disciplinary Action: Desirability of Disciplinary Action. Atti- 
tude toward Employees. Implications of Disciplinary Action. 
Union-Management Relations. 

24. POSITIVE MOTIVATION OF EMPLOYEES 483 

Introduction. Meaning of Positive Motivation. Steps OF POSITIVE 
Motivation: Tools of Motivation. Analysis of Individual Differ- 



TABLE OF CONTENTS xvii 

CHAPTER PAGE 

ences. Selecting Motivating Tools. Applying the Motivation. Fol- 
low-Up. Fundamentals of Motivation: Importance of Self-in- 
terest. Importance of Attainability. Proportioning Rewards. In- 
tangible Motives. Combinations of Motives. Union-Manage- 
ment Relations. 

25. PHYSICAL SECURITY 499 

Introduction. Objectives. Trends. Working Conditions: General 
Considerations. Phases of Working Conditions. Variations in 
Working Conditions. Health: Pertinent Factor. Medical Examina- 
tions. Health Services. Organization for Medical Services. Safety: 
Importance and Scope. 

26. ECONOMIC SECURITY 525 

Scope. Insurance Plans: Risks Covered. Life Insurance. Hospital 
and Surgical Plans. Federal Old-Age Assistance. Private Pen- 
sions: Introduction. Eligibility. Amount of Benefits. Supplemental 
Benefits. Financing. Contributions to Costs of Pensions. Administra- 
tion. 

27. SERVICE AND PARTICIPATION PROGRAMS 545 

Scope of Plans. Recreational, Social, and Athletic Services: 
Recreational and Social Programs. Athletic Programs. Music in the 
Plant and Office. Participation Programs: Company Periodicals. 
Suggestion Systems. Convenience Services: Restaurant Facilities. 
Company Stores. Credit Unions. Miscellaneous Services. Medical 
Services. Consultative Services. Organization for Service 
Plans: Example of Service Organization. Organizational Plan un- 
der Decentralized Operations. Company Experts. Rules of Opera- 
tion. 

28. WOMEN IN INDUSTRY 569 

Introduction. Industrial Background of Women Workers. Require- 
ments of Modern Industry. Male and Female Differences: 
Physical Characteristics of Women. Mental Characteristics. Emo- 
tional Characteristics. Social Characteristics. Dependability. Miscel- 
laneous Qualities. Legal Aspects. Principles of Supervising 
Women: Practices and Policies. Similarities. Differences among 
Women. Handling Differences between Men and Women. Adjust- 
ing Practices to Unproved Differences. 

29. MISCELLANEOUS PHASES OF PERSONNEL 589 

Introduction. Public Relations. Fringe Benefits. Minority Group s^ 
The Handicapped Workers. The Older Employee" Retirement of 
Employees and Executives. Automation. Cybernetics. 



xviii TABLE OF CONTENTS 

CHAPTER . PAGE 

30. PERSONNEL RESEARCH AND EVALUATION 608 

Introduction. Personnel Research: Nature and Scope. Basic 
Considerations. Examples of Research: Absenteeism. Sociologi- 
cal Research. EVALUATION: Nature and Scope. Basic Considera- 
tions. Subjects and Methods and Evaluation. Summary. 

APPENDIX A. INSTRUCTIONS FOR FILLING OUT THE JOB 
ANALYSIS SCHEDULE 633 

APPENDIX B. REPORT ON LABOR TURN-OVER 642 

BIBLIOGRAPHY 645 

CASE PROBLEMS 648 

INDEX 713 



Table of Gases 



CASE 

NO. PAGE 

1. Nationality Groups 649 

2. Personnel Philosophy 650 

3. Time-Off Problem 653 

4. Enforcing Policies 654 

5. Organizational Lines 655 

6. Job Requirements 658 

7. A Turnover Problem 660 

8. Estimating Manpower Requirements 661 

9. A Selection Problem . 663 

10. A Placement Problem 664 

11. Employment Office Location ' . 665 

12. Placement, Training, and Motivation 666 

13. Testing Supervisors 668 

14. A Placement Test 670 

15. Who Gets the Job? 671 

16. Merit Ratings 673 

17. Apprenticeship Programs 676 

18. Vacation Periods 677 

19. Transfers and Promotions 679 

20. Seniority 680 

21. Rates and Classifications 681 

22. First-Line Supervision and Organized Labor 684 

23. Educating an Executive 686 

24. The Five-Day Week 688 

25. Downgrading 689 

26. Spreading the Work Load 691 

27. A Time Problem 693 

28. Work Assignments 695 

29. Contract Interpretation 698 

30. Dealing with Unions 699 

31. Motivation 700 

32. The Discontented Sewing Machine Operator 702 

33. Safety 705 

34. Absenteeism 707 

35. Getting the Facts 708 

36. Racial Problems 710 

37. Personnel Evaluation 711 

xix 



CHAPTER 

The Field of 



1 



Personnel Management 



THE CHALLENGE OF HUMAN RELATIONS 

From many sides, in numerous ways, we are constantly being reminded 
of the overwhelming importance of labor-management relations. All 
forms of news agencies carry reports on conditions in such relations; 
governmental officials and politicians make them matters of prime con- 
cern; and business and union leaders agree that they constitute a field 
of first magnitude. 

Even were one disinclined to believe the findings of the foregoing 
groups, one's own personal experiences from childhood to old age would 
be impressive proof of the contention that getting along with others 
in business or industry comprises a large segment of one's life. With 
many people, their jobs take up most of their time. Moreover, personal 
aspirations, interests, fears and joys, and matters of family and com- 
munity discussions and problems are often tied into the job one holds. 

Since human relations in business (and in other areas of human 
endeavor, too) are so pervasive, it is easy to understand why, in recent 
years, so much attention has been directed to the consideration of prob- 
lems arising in this area. Moreover, it takes no great prophet to fore- 
cast that even more attention will be directed to them in the coming 
years. This is not an admission that conditions here are on the down- 
grade. Rather, it is based upon the fact that more and more groups, as 
well as the individuals themselves, are realizing that there is no greater 
challenge than that of learning how to live and work together in greater 
harmony and with greater satisfaction to all concerned. 

PROBLEMS OF HUMAN RELATIONS 

Many problems beset this challenge. Their breadth and importance 
may be quickly seen in the following classification of who is interested 
in labor problems: 

1. The efforts of labor to improve its economic, political, and social position 
by means of — 

1 



2 PERSONNEL MANAGEMENT 

a) The personal powers of the individual worker 

b) Organized groups as contrasted with individual efforts 

c) Industry-wide as contrasted with company- wide activities 

2. The efforts of employers to direct, utilize, and control labor in terms of — 

a) The individual worker 

b) Organized groups of workers 

c) The confines of a given factory, office, or other business enterprise 

d) Industry in general as an institution of production and distribution 

3. The multilateral relations between labor, employer, government, and the 
general public in terms of — 

a) Economic aspects 

b) Social aspects 

c) Psychological aspects 

d) Political aspects 

e) Legal aspects 

There is little uniformity in applying particular terms to any of the 
subjects outlined above. "Industrial relations," for example, has been 
used to refer to multilateral relations between employers, labor, and 
government. To other users it means the relations between labor and 
management within the confines of a given factory or office. The term 
"labor relations," in the language of one user, may refer to collective 
bargaining, and, in that of another, it may refer to the "human" aspects 
which are significant in a given situation as opposed to the mechanical 
skills. And still others have tagged some of these subjects with such 
terms as "human engineering," "labor management," "personnel serv- 
ices," "personnel administration," and "manpower management." Be- 
cause of the absence of standard definitions, the reader must make cer- 
tain that he is aware of the meanings of particular terms in any given 
case. Only in this way can the student make certain whether or not two 
persons who are using the same term, such as "industrial relations," are 
really using it in the same sense. Unfortunately, as yet, the field of 
personnel management suffers from semantic difficulties. 

SCOPE OF PERSONNEL MANAGEMENT 

It is now pertinent to inquire into the precise nature of personnel 
management. What is presented here is done solely as a springboard for 
analysis and not with the claim that the final word is being said on the 
subject. The discussion in Chapter 2 will serve as sufficient warning that 
this area is one that is in constant flux. With this in mind, personnel 
management is described here as follows: 

The field of management which has to do with planning, organizing, and 
controlling: 



THE FIELD OF PERSONNEL MANAGEMENT 3 

various operative functions of procuring, developing, maintaining, and utiliz- 
ing a labor force, such that the — 

a) objectives for which the company is established are attained eco- 
nomically and effectively 

b) objectives of all levels of personnel are served to the highest possible 
degree 

c) objectives of the community are duly considered and served 

1. Managerial Phases. This broad statement emphasizes, to 
begin with, that personnel management is a responsibility of manage- 
ment. This does not preclude others from participating in consideration 
of matters important to them. It does mean, however, that management 
must assume constructive leadership in personnel work, else the prin- 
ciple of specialization of effort is violated. Such managerial specializa- 
tion encompasses three specific functions: planning, organizing, and 
controlling. 

The planning functions pertain to the steps taken in developing a 
personnel program and in specifying what and how operative personnel 
functions are to be performed. Such plans are often unwritten, but it is 
usually preferable to set down such programs in printed form. 1 More is 
said on this subject in Chapter 3. 

After plans have been developed, organizing is next in order. This 
step calls for procurement of necessary staff to carry out the plan, selec- 
tion of necessary equipment, and establishment of lines of authority and 
communication between the various parties working with, or receiving 
benefit from, the personnel plans. Which aspects of plans will be 
handled by the personnel department and which by the line executives 
must be determined in this managerial phase. In Chapter 4, various 
schemes of organizing personnel work will be discussed. 

It is of interest that some companies are assigning the study and plan- 
ning for organization structures to the personnel division. This is being 
done because key personnel are such an important part of developing 
good structures, because job and duty analysis is an accepted part of 
personnel work, and because organizational changes often involve nu- 
merous hirings, layoffs, transfers, and promotions — all in the province 
of the personnel division. 

By means of control, management first gives active direction to the 
personnel program and, second, evaluates results in comparison with 
desired objectives. The first phase of control is like the navigation of 
a ship. Controls guide the personnel ship along the lines laid out in the 

1 American Management Association, How to Establish and Maintain a Personnel De- 
partment (Research Report No. 4) (New York, 1944), pp. 18-23. This report contains 
an excellent example of such a plan. 



4 PERSONNEL MANAGEMENT 

program. When the ship docks (at the end of the program year, let 
us say), controls are exercised to determine how effectively desired 
personnel objectives were attained. Thus through direct observation, 
direct supervision, as well as reports, records, and audits, management 
assures itself that its organization is carrying out planned personnel 
programs. 

2. Operative Phases of Personnel Work. In the second 
place, the foregoing definition places emphasis upon four broad and 
fundamental phases of personnel work. These arise out of the fact that 
a working force must be procured, developed, maintained, and utilized. 
Each function must be performed effectively. 

Each involves, of course, many detailed duties and tasks. "Procure- 
ment" calls for performance of such functions as locating sources of 
supply, interviewing applicants, giving physical and mental tests, and 
guiding selected applicants. "Development" calls for training and edu- 
cation, morale building, good communication between executive and 
worker levels of the organization, promotion and transfer plans, sug- 
gestion systems, and similar plans. "Maintenance" encompasses aspects 
of all activities in so far as they serve to support the skills and favorable 
attitudes of employees. Adequate wages and working conditions, super- 
vision, grievance machinery, recreational and social programs, and 
housing plans are cases in point. Of course, all of the foregoing impinge 
upon the "utilization" of labor. Here lies the focal point of all personnel 
effort because the key to the success or failure of all personnel plans is 
the working effectiveness of the employee. 

A discussion of operative functions is out of place at this point, but, 
merely to illustrate their nature, the following list is worth scanning: 

I. Employment 

1. Source of labor supply 

2. Reception of applicants and interviews 

3. Investigation of references 

4. Physical examinations 

5. Employment tests 

6. Final selection and placement 

7. Introduction to the job 

8. Provision for equipment, locker facilities, etc. 

9. Continued contact 

10. Personnel records 

11. Transfers and promotions 

12. Exit interviews and terminations 



II. Wages and hours 

1. Wage scales 

2. Salary and wage standardization 



THE FIELD OF PERSONNEL MANAGEMENT 5 

3. Incentive plans 

4. Overtime pay 

5. Profit-sharing or bonus plans 

6. Hours 

7. Holidays 

8. Vacations 

III. Working conditions 

1. Plant housekeeping 

2. Ventilation and lighting 

3. Sanitary facilities 

4. Rest periods 

5. Eating facilities 

IV. Training and education 

1. Training on the job 

2. Company courses, conferences, and lectures 

3. Co-operation with outside agencies 

4. Employee manuals 

5. Employee publications 

6. Bulletin boards 

7. Library 

8. Facts about the company 

9. Suggestion system 

V. Safety 

1. Safeguarding hazardous occupations 

2. Safety education 

3. Workmen's compensation 

VI. Health 

1. Physical examinations 

2. Health education 

3. First aid in company hospitals 

4. Home visiting 

5. Laboratory studies 

VII. Economic security 

1. Steady employment 

2. Unemployment insurance 

3. Life insurance 

4. Accident and health insurance 

5. Retirement plan 

6. Hospitalization plan 

7. Thrift and savings plan 

8. Housing program 

VIII. Contacts with employees 

1. Opportunities for personal contacts between management and em- 
ployees 

2. Open channels for grievances 



6 PERSONNEL MANAGEMENT 

3. Consultation with employees on matters of mutual interest 

4. Collective bargaining 

IX. Service activities 

1. Athletics and recreation 

2. Social activities 

3. Employees' clubs 

4. Discounts on employees' purchases 

5. Legal aid 

6. Charities 

X. Research and statistics 

1. Job analysis 

2. Accident records 

3. Labor turnover studies 

4. Absenteeism and tardiness 

5. Analyses of personnel policies 

6. Wage levels and cost of living 

7. Personnel programs and methods 

8. Labor legislation 

To perform these tasks, management must employ a variety of tools, 
devices, forms, records, and procedures. As a consequence, these forms 
sometimes seem to be the substance of personnel work. They are a 
means to an end, however, and should be viewed as such. To allow 
forms to become the keystone of a personnel program is to convert per- 
sonnel management into a clerkship. 

3. Objectives. The description of personnel management, in the 
third place, stresses the point that personnel work is intended to attain 
a number of important objectives. High place must at once be given 
here to success in producing a service or commodity which earns a 
reasonable profit. The success achieved in producing a commodity or 
service and in earning, in turn, a profit is patently dependent upon the 
effectiveness with which the various members of the business team work 
together. Personnel management must seek, therefore, to make labor as 
effective a contributor to the success of the enterprise and its owners as 
possible. Unless a particular enterprise is successful, it can neither con- 
tinue to exist nor have use for labor or management. 

The foregoing definition recognizes clearly and unequivocally that 
the performance of personnel duties must also keep in view the best 
interests of labor itself. Although it is not always possible to determine 
accurately what the best interests of labor are and although the interests 
vary from time to time, nevertheless, personnel management must face 
this issue fairly and squarely. Indeed, management must seek more 
earnestly than ever before to assure labor that it is receiving a fair deal. 
Else others will be more than eager, in ways which may run counter to 



THE FIELD OF PERSONNEL MANAGEMENT 7 

those considered good by the employer, to help labor attain desired 
goals. And, finally, personnel management must seek to preserve and 
advance the general welfare of the community. No company operates 
in an economic world alone; each company must make adequate con- 
tributions and adjustments to the social and political aspects of com- 
munity life. 

In summary, this analysis of personnel management may seem some- 
what idealistic. After all, few companies are performing all the per- 
sonnel functions cited here, and all companies do not take the views to- 
ward labor proposed here. Nevertheless, the practices and viewpoints 
of companies which have had the best results from their personnel ac- 
tivities tie in closely with the foregoing suggestions. And in the future, 
even more so than at present, a total program must encompass care- 
fully considered practices of personnel if a given company expects to 
retain its position in our economic world. 

RESPONSIBILITY FOR PERSONNEL MANAGEMENT 

To whom shall responsibility for this field of personnel manage- 
ment be assigned? In the minds of many, the answer may be the per- 
sonnel manager or some individual with a similar title having reference 
to the head of a formal personnel department. Without doubt, this is 
a popular and growing conception. 

However, in the final analysis, and in terms of actual labor-manage- 
ment problems, personnel management should be viewed as a major 
task of every member of management. From the lowest supervisor to 
the topmost executive position — whether a man be in production, sales, 
accounting, or what not — he must be considered a personnel manager, 
and he should so conduct himself. 

To carry out his responsibilities in this area, an executive soon re- 
alizes how heavy is the burden that is added to the load which his 
specialized assignment entails. He therefore welcomes the assistance and 
advice which a competent personnel department can provide. Because 
line executives are turning more and more to such departments for help, 
the personnel department has grown in stature in recent years. This 
growth may sometimes seem to place responsibility for personnel work 
in such a department. The idea should never be allowed to gain ac- 
ceptance, however, that line executives have consequently been relieved 
of personnel responsibilities. To repeat, line and other executives are in 
positions from which personnel relations cannot be removed; what help 
they can receive from a personnel department should supplement their 
efforts, not supplant them. 

The formal personnel department is the accessory rather than the 



8 PERSONNEL MANAGEMENT 

main vehicle of labor-management relations. Whatever is said about a 
personnel department in this textbook should be related to the work of 
line executives, who ultimately are the keys to successful personnel ac- 
tivities. Indeed, it is the manner in which first-line supervisors apply per- 
sonnel policies which will usually make or break any personnel program. 

THE PERSONNEL EXECUTIVE 

The foregoing review has served to point out the general area of per- 
sonnel management. Another view of the field may be had by com- 
menting upon the qualifications which a person should possess if he 
aspires to an executive position in this field. 

Very frequently one hears from those seeking to prepare themselves 
for personnel work that they made the choice because they "like to work 
with people." This is highly commendable but should scarcely be the 
deciding factor. After all, one must "like to work with people" in almost 
all fields of professional and technical endeavor. Moreover, the words 
"working with people" are too indefinite — they may mean such things 
as helping others out of trouble (of which there are many kinds, and 
not all are of interest to the business enterprise) ; simply liking to work 
side by side with others (no more than ordinary gregariousness); and 
telling people what they should or should not do (often a mere desire 
for power). Hence, desirable as it may be to possess the quality of 
liking others, there are other qualities which are more significant and 
found less often in aspirants to positions in personnel work. 

The degree of success which an executive can hope to attain is de- 
pendent largely upon his managerial and technical skill and ability. In 
the case of personnel executives, technical skill most certainly must be 
buttressed by managerial skills. In the case of line executives, to their 
functional technical skills must be added those pertaining to personnel 
relations. In either case a premium is placed upon the ability to plan, 
organize, and control the work of others. The emphasis is upon manag- 
ing the work of others, not upon doing the work oneself. To be sure, 
one's qualities of leadership are in part determined by how well one 
knows the problems and techniques of one's subordinates. But technical 
skill is much more commonly found than that which calls for ability to 
direct others, to co-operate in the work of other executives, and to fit 
one's department into the procedural and organizational structure of the 
enterprise. 

The need of managerial training in personnel work is being increas- 
ingly recognized by business, as may be seen in the following statement 
on the subject by the American Management Association: 



THE FIELD OF PERSONNEL MANAGEMENT 9 

It is difficult to prescribe absolute or inflexible requirements of specialized 
education, training and experience for personnel work. However, the broad 
pattern of a desirable background may be outlined: 

1. Regardless of the extent of the candidate's formal education, he should 
have completed at least a few courses bearing directly on personnel work. 
Basic preparation for a personnel position should include some training 
in psychology (primarily abnormal, industrial, and social), labor prob- 
lems, labor legislation, sociology, statistics, economics, personnel adminis- 
tration, and general management. Personnel practice of an advanced 
nature requires familiarity with the specific techniques involved in inter- 
viewing, employment testing, personnel record-keeping and personnel 
research. In the modern personnel setup a further knowledge of job 
analysis and evaluation, merit rating, and collective bargaining is daily 
growing in importance. 

2. Previous industrial or business experience in the ranks and in an executive 
capacity is valuable in developing an understanding of the problems of 
general management as well as a realistic attitude toward personnel prob- 
lems. (Some personnel executives also cite experience in teaching, voca- 
tional guidance, educational personnel work, and social work as providing 
a good background for specialization in industrial personnel work.) 

3. A period of apprenticeship in a personnel department supervised by an 
able executive is especially advantageous in developing the required in- 
sight into human relations and sound concepts of personnel practice. 

4. Most valuable is a record of successful organization and development of a 
personnel program for one or more companies. 2 

The executive and professional aspects, perhaps even more than the 
technical, are stressed in the foregoing statement. This is to be expected 
because, more and more, the personnel executive is being given a job 
which calls for, first, technical study and training beyond the borders of 
mere trade knowledge; second, large responsibilities toward the indi- 
viduals he is expected to serve; and, third, a high level of ethics in deal- 
ing with labor and management. As long as personnel work is viewed 
as a routine skill, it has no claim to professional status. But when per- 
sonnel executives themselves establish high standards of performance 
for themselves and adopt high standards of ethical conduct, labor and 
the general public will not be long in according them the professional 
status to which they legitimately aspire. 

EDUCATION OF PERSONNEL MANAGERS 

It is undoubtedly true that many executives performing functions of 
personnel management either as a phase of their regular job or as a 
staff service to others learned about personnel work on the job, by self- 
experience and by self -education. Acquiring competence in this school 

2 "The Qualified Personnel Director," Personnel, November, 1945, p. 141. 



10 PERSONNEL MANAGEMENT 

of hard knocks is invariably time-consuming, costly, and full of hazards, 
although it is sometimes the only course available. 

Because the "graduates" of this school of experience themselves ad- 
vise the acquisition of formal training when possible, it is understand- 
able why more and more companies are seeking to fill their personnel 
staffs with individuals who have had such training. For example, in a 
recent survey 3 of practicing personnel executives, it was reported that 
the executives recommended that such courses as the following be in- 
cluded in a college training program: English, economics, psychology, 
statistics, public speaking, industrial management, time and motion 
study, personnel management, labor relations legislation, labor prob- 
lems, job evaluation, and psychological testing. And it would be remiss 
not to add to this list such courses as industrial sociology, ethics, and 
business policies and management. 

A recommendation such as this does not imply that formal education 
is the only answer to preparing for a career in personnel work. It does 
carry weight in the recognition it gives to the coming professional status 
of personnel management. Here, as in other fields, competence to serve 
in personnel work will be better achieved if formal education and work- 
ing experience are combined in the best proportions. And education 
need not stop with a college degree and may continue through post- 
graduate courses and certainly should include personal self -education. 

QUESTIONS AND PROBLEMS 

1. Look up the definition of the term "problem." Does the definition imply 
a criticism of anyone when it is applied to the field of labor-management 
relations? Explain. 

2. By what means can the attention of labor and management be directed to 
the solution of problems rather than to recriminations against each other? 

3. How can a number of groups be at one and the same time "responsible" 
for labor-management relations? Indicate in what respects the term "re- 
sponsibility" is being used in connection with a specific group. 

4. Check the definition of personnel management given in this text against 
personnel practices in the companies in your community or in companies 
with which you are acquainted. Explain any differences which you may 
note. 

5. How would you proceed to prove the contention that personnel manage- 
ment is a specialized phase of management? 

6. How are the managerial phases of personnel management related to the 
functional phases? 



Donald S. Parks, Occupations, February, 1948, p. 288. 



THE FIELD OF PERSONNEL MANAGEMENT 11 

7. Illustrate concretely examples of planning, organizing, and controlling per- 
sonnel functions. 

8. Some believe that a favorable attitude toward a broad and liberal program 
of personnel management is inconsistent with the profit motive. What is 
your position on this issue? Explain. 

9. Does industry have social responsibilities? If so, what are they? Have the 
obligations changed much in the past fifty years? 

10. Who, in the final analysis, is the personnel manager in an industrial or 
business enterprise? Upon what grounds do you justify your answer? 

11. Why is training so essential to the devolpment of those interested in enter- 
ing the field of personnel management? What is the alternative to formal 
training? What is the major shortcoming of the alternative? 

12. What qualifications should be possessed by a personnel executive? How 
much weight would you give to the quality of "liking to work with people"? 

13. Discuss the importance of leadership qualities in a job specification for 
personnel managers. Contrast leadership qualities with those of technical 
requirements. 

14. Is personnel management a profession? What are the fundamental require- 
ments of a profession? 

15. In the light of how personnel departments have grown in the past quarter 
of a century, how do you explain the labor unrest which so often reaches 
the newspaper headlines? 

16. Make a list of various sciences and arts which have contributed to better 
labor-management relations. After each, indicate the contributions made. 

17. Make a list of subjects about which the personnel manager should keep 
informed by reading or attending conferences. Isn't the list formidable? 
How can the personnel manager keep abreast of developments and still 
do his daily work? 

18. To what types of organizations, professional and social, do you feel the 
personnel manager should belong? Explain. 

19. What would you consider to be the best means and way of introducing 
those interested in entering personnel management into this type of work? 
If you have an acquaintance or can conveniently contact a person engaged 
in personnel work, ask his opinion on this question. 

20. What have such groups as the American Management Association and the 
Society for the Advancement of Management to offer the personnel man- 
ager? Review some of the literature before submitting your answer. 



OS 

ft 



CHAPTER 









ft 






2 



A Perspective of 
Personnel Management 



IMPORTANCE OF PERSPECTIVE 

It must be apparent from the discussion in the foregoing chapter that 
personnel management is of great significance to many groups. To learn 
how its work may best be done requires a backward as well as a forward 
look. One cannot understand present and future prospects unless he is 
acquainted with the background of labor-management relations, with 
the major trends of historical development, and with basic forces operat- 
ing in this field. Hence the major concern in this chapter will be with, 
first, historical factors in personnel management and, second, present 
and future prospects. 

HISTORICAL CHANGES 

Many impressive changes have taken place in the status and position 
of labor in the United States, partic ularly since the Ciyj jLWar. Of course, 
comparisons with earlier periods and with conditions in foreign coun- 
tries would be even more startling. For present purposes, however, a 
brief description and study of important changes during the period speci- 
fied will suffice. Even for this period, however, desired information is 
not always available, which is evidence, by the way, of how recent is 
the development of interest in the general field of labor relations. 

As certain interpretations are made here, it may seem that the intent 
is to criticize those in responsible positions of labor, management, and 
government. This is not so. The wisdom of hindsight surpasses that of 
foresight. Rather, the intent here is to note some of the lessons of chang- 
ing labor conditions so that the student, first, will not view personnel 
management in the light of conditions that no longer exist; second, will 
see more clearly the forces that have brought about changes; and, third, 
will learn to be alert for signs of significant changes. 

The forces that have been and are at work in the field of labor and 
management relations are closely intertwined. Hence, within the limited 
scope of these pages, any attempt to unravel the threads of cause and 

12 



A PERSPECTIVE OF PERSONNEL MANAGEMENT 13 

effect must perforce be arbitrary and no more than suggestive. In the 
following discussion, a study of histo rical changes is based (with the 
knowledge that the classifications are not mutually exclusive) upon the 
following general classes or types of changes: 

1. The cultural and social background of labor 

2. The technological conditions of industry and commerce 

3. The relations of government to business and labor 

4. The relations of labor to management 

CULTURAL AND SOCIAL BACKGROUND 

In dealing with labor, it is essential to know the cultural and social 
background of labor. This follows because the attitude that labor (and, 
for that matter, any group of people) assumes toward its interests de- 
pends upon its conditioning background. In this respect, some signifi- 
cant changes have taken place in the United States since the Civil War. 
Although many forces are at work in this connection, study of trends in 
public education, urban and rural population, and immigrant versus 
native-born population as sources of workers, as well as the sociological 
pattern of labor, will be sufficient to illustrate how the make-up of labor 
has changed and continues to change. 

1. Educational Background. In regard to education, for ex- 
ample, a much larger percentage of the population is now enrolled in 
school. In the age group from five to twenty years, for example, the per- 
centage of the population which attended school was under 60 in 1910, 
but over 70 in 1950. Another bit of evidence of interest along these 
lines is that almost six times as many enlisted men in military service 
during World War II had completed high-school training as those dur- 
ing World War I. Obviously, as the base of education broadens, the 
working population is bound to gain a new outlook that makes it ques- 
tion the status quo. 

2. Factors of Immigration. Changes in the population make- 
up, too, are also striking. For example, the relation between native-born 
population and that due to immigration has changed drastically. Immi- 
gration provided a major source of the population increase from 1880 to 
1910. This fact is of great significance because the immigrants usually 
fall into the working-age group of the population, whereas the native- 
born figures also include those too young to work. Since 1910, however, 
the wave of immigration has fallen off rapidly. Indeed, during the dec- 
ade starting with 1930, emigration exceeded immigration. Since the late 
thirties, however, immigration has slightly exceeded emigration. 

Such changes in the working population are of vital consequence to 



14 PERSONNEL MANAGEMENT 

the student of personnel management. Gone, except for insignificant 
numbers, are the immigrants who viewed working conditions here as 
far superior to those of the lands from which they came. Gone are those 
who had a standard of comparison ( or at least their standards have been 
changed after long years in the United States) based upon undesirable 
and sometimes despotic living and working conditions. In their place 
is largely a working population whose framework of reference and com- 
parison makes them unwilling to accept the word of the "boss" as final 
and unequivocal. Labor wants to know what is going on and often wants 
to have a voice in affairs affecting its interests. In short, the fact that im- 
migration has virtually stopped should be enough to warn the alert 
student that one is no longer dealing with employees who are willing to 
accept without question any working conditions. 

3. Rural and Urban Population. Another trend of popula- 
tion change of interest here is that relating to changes in the rural and 
urban population. These changes are impressive. From 1850 to 1950, 
the percentage of the population living in rural areas has decreased from 
about 85 per cent to about 35, a decrease of almost 60 per cent. On the 
other hand, the urban areas have been growing. A striking example of 
this may be seen in the fact that there were no cities of a million in 
1850; but in 1950, 12 per cent of the population lived in such centers. 

As greater numbers of workers congregate in large cities, they be- 
come less independent than they once were. They are affected more 
directly by the business cycles and less by the cycles of agricultural 
plenty and scarcity. Less and less can they fall back upon their own re- 
sources when depression hits. Their views consequently revolve with in- 
creasing intensity around the need of attaining economic security. Per- 
haps for this reason, the contention is heard frequently that business 
must accept certain social responsibilities, which is another way of say- 
ing that business must be prepared to support labor during bad, as well 
as good, times. 

4. Sociological Patterns of Labor. Perhaps the most signifi- 
cant change in the background of labor is that pertaining to its sociolog- 
ical status in the community and, as a consequence, in its place of work. 
At one time, labor enjoyed relative stability regarding its place in the 
community and in industry. Most workers had a sense of security de- 
riving from this relative stability. From the job a worker held, he was 
accorded a definite place in the eyes of his fellow workers and his neigh- 
bors. This scale of prestige values was informal, yet was recognized and 
respected by all concerned. A worker knew that, if his current job was 
low in the scale of values, there was a ladder of jobs of greater prestige 



A PERSPECTIVE OF PERSONNEL MANAGEMENT 15 

and status which he might climb through the years. Thus the existence 
of an established and relatively unchanging framework provided a basis 
of security and satisfaction which served to engender a minimum of in- 
dividual discontent and class warfare. 

But, for a number of reasons, this rigid structure began to change. 
Technological mass production, concentration of financing in a few 
large cities, and improvements in communication brought telling 
changes in the mode of living in almost all our urban areas. As a con- 
sequence of these, the worker saw his chance to move upward through 
a well-organized series of trades destroyed by technical changes which 
leveled most jobs to a uniform status of repetitive mechanization. He 
saw his "boss," once owner of the plant with power to decide, a signifi- 
cant member of the community, become an employee like himself. New 
owners, who were established elsewhere far from the worker's everyday 
problems and little concerned, if at all, with the affairs of his commu- 
nity, decided his working conditions. He saw the departure of younger 
members of the community who might have tended to continue and 
respect the social practices of old; and he saw them replaced by influxes 
of strange workers who cared little for community traditions or existing 
relationships. 

As this change proceeded, the relative harmony which had prevailed 
in labor-management relations was replaced by increasing degrees of 
discontent. As the sense of security of social and economic status was 
being reduced, uncertainty entered more and more into the worker's 
thinking and actions. He became restive because his job gave him 
neither prestige nor security, he could not look to his boss as a pillar of 
the community, and his faith in the future was shaken. And, while once 
he had felt that his place of work was a contributor to his well-being, 
he began to conclude that it was perhaps his enemy. So case after case 
materialized in which a pattern of harmonious community relations was 
replaced by suspicion, antagonism, and non-co-operation. 

This factor of the impact of sociological patterns upon labor-man- 
agement relations cannot be overestimated. How any employee feels 
about his job and his company is greatly influenced by how his neigh- 
bors rate and respect them. The status accorded him has a strong effect 
upon his sense of satisfaction and stability. Unfortunately, the forces at 
work in our modern society seem to portend more unsettled, rather than 
more settled, trends in our social and group relations. Hence the student 
of personnel management should be prepared to recognize these dis- 
turbing factors. Nor need he become unduly pessimistic about the 
future, because there is good reason to believe that, having recognized 



16 



PERSONNEL MANAGEMENT 



the existence of disturbing sociological forces, a big step is taken in also 
recognizing that something must be done about them if better labor- 
management relations are to be developed. 



TECHNOLOGICAL CHANGES 

Technological changes in industry, commerce, and communication 
have also played a leading role in the growth of personnel management. 
From a system of manufacturing in which various products were made 
in the home, there has evolved one in which large numbers of workers 
are brought together under the immense roofs of modern factories. Ac- 
table i 

Estimated Relative Supply of "Work Energy" from Mineral 

Fuels and Water Power, Work Animals, and Human 

Workers, 1850-1960, in Percentages* 



Year 


Mineral Fuels 
and Water Power 


Work 
Animals 


Human 
Workers 


1850 


5-8 
6.5 
11.5 
17.2 
27.5 
37.8 
56.9 
73.5 
83.7 
90.0 
94.0 
96.3 


78.8 

79.2 

73.1 

68.6 

60.5 

51.7 

34.7 

20.8 

11.7 

6.4 

3.0 

1.3 


15.4 


1860 


14.3 


1870 


15.4 


1880 

1890 

1900 


14.2 
12.0 
10.5 


1910 


8.4 


1920 


5.7 


1930 


4.6 


1940 


3.6 


1950 


3.0 


1960 


2.4 



* Source: J. Frederic Dewhurst and Associates, America's Needs and Resources (New 
York: Twentieth Century Fund, 1947), p. 787. 

companying this change has been a transition from manufacturing oper- 
ations carried on manually with the aid of simple tools to operations 
that are complex, integrated, and in which power-driven equipment pre- 
dominates. These changes may be seen more dramatically in the figures 
in Table 1. It is shown here that the contribution of human energy to 
the total supply of work energy is estimated to have decreased from 
15.4 to 3.0 per cent from 1850 to 1950. The estimate for "mineral" 
energy shows an increase of from 5.8 to 94.0 per cent for the same 
period. In other words, within this relatively short span of time, the 
physical work of manufacturing has been largely turned over to the 
machine. 

As might be expected, such technological changes have left their im- 
pact upon labor. Instead of large numbers of craftsmen, the working 
population is now made up largely of machine tenders, desk workers, 
and service employees. Instead of jobs in which employees have oppor- 



A PERSPECTIVE OF PERSONNEL MANAGEMENT 17 

tunities for initiative and craftsmanship, the average factory job, in and 
of itself, is repetitious and more restrictive. Instead of experiencing the 
satisfactions of planning and creating in their jobs, the workers too often 
were "cogs" in a machine. Moreover, the workers have been separated 
from their tools and have lost a strong link with pride in this work. Of 
course, there are offsetting social gains of mass production. Neverthe- 
less, the worker has lost something in the working situation which must 
be gained elsewhere (as some believe, in the structure of unions) if his 
working days are to be anything more than an uninspiring round of 
drudgery. 

When such technological changes take place suddenly, as they often 
have, many workers find themselves replaced by machines. That such 
changes may be beneficial in the long run provides little satisfaction to 
the workers suffering from "technological unemployment." And the ef- 
fects of technological unemployment may well be accentuated in the 
current beginnings of automation. This refers to the attempts to develop 
and operate self -regulating, mechanized manufacturing operations. So 
far, success has attended efforts to achieve automation in producing 
major parts of products. As this trend gains momentum, new problems 
of human relations will develop : how to develop the needed large num- 
bers of engineers, maintenance employees, and technicians; how to pro- 
vide for employees displaced by machines; how to provide incentives 
for employees who themselves are subject to the control of machine 
speeds; and how to design supervisory and organizational techniques to 
meet these new challenges. These are major questions which changes in 
technology have raised regarding the relations between management 
and labor, some of which will be touched on shortly in this chapter. 

THE ROLE OF GOVERNMENT 

Momentous changes have also taken place in the relation of govern- 
ment to labor and business. This may be seen in ( 1 ) government atti- 
tudes to labor and management, (2) the growing strength of unions, 
and ( 3 ) legislative changes. 

1. Governmental Attitudes. From an earlier attitude of gen- 
eral disinterest and passiveness, government has in some cases taken 
giant steps in the direction of positive intervention. And from a role 
in which it tended invariably to side with capital, government has 
turned more and more in the direction of becoming a protagonist and 
guardian of the interests of labor. Perhaps the increasing proportion of 
votes that are coming from the side of labor has much to do with this 
change. 

About the time of the Civil War and for some time afterward, labor 



18 PERSONNEL MANAGEMENT 

possessed few powerful friends in governmental circles. The concept of 
interstate commerce had not been extended to cover manufacturing, so 
that the legislative branch of the federal government was in no position 
to interest itself in the problems of the workingman. The state assem- 
blies were preoccupied with such matters as expansion and state versus 
federal rights and therefore had little time to become concerned with 
labor matters. Moreover, the nation was as yet largely an agricultural, 
pioneering, and maritime country, so that labor problems arising in in- 
dustry and commerce were in the minority and so were easily passed 
over. 

Then, too, the executive branch of the federal government had not 
yet attained any real measure of political strength. It was without the 
power to have helped labor, even had it been disposed to do so; and the 
judicial branch was preoccupied with precedent and historical views of 
property rights, so that it sided more often than not with capital inter- 
ests whenever arguments with labor arose. Indeed, court injunctions 
were a favored and easily obtained weapon of employers to combat 
picketing and boycotts, to stop strikes, and to limit union activities. 

2. Growing Strength of Unions. However, the hand of labor 
gradually gathered political and economic strength. Evidence of grow- 
ing strength may be found in the trends of membership in unions. A 
few unions, such as those of the typographers, stonecutters, and hat 
finishers, were in existence about the time of the Civil War, but the 
membership was relatively small. Perhaps the first real strength of 
unions was displayed in the growth of the Knights of Labor, which 
reached a peak membership of about 700,000 in the 1880's. For vari- 
ous reasons, however, it went into a decline from which it never recov- 
ered. Nevertheless, this group left its imprint upon subsequent union 
activities. 

Believing that the Knights of Labor were wrong in participating in 
political activities, others in the labor movement took steps to form the 
American Federation of Labor. The growth of this federation of local 
and autonomous unions has been slow but steady. Its membership has 
grown as follows: 

1881 45,000 1920 3,970,000 

1890 220,000 1930 2,950,000 

1900 550,000 1940 4,250,000 

1910 1,580,000 1950 8,000,000 

To these figures must be added membership in other unions in order 
to obtain a complete picture of union strength. As of 1950, total union 

1 R. A. Lester, Economics of Labor (New York: Macmillan Co., 1941), p. 550, 
and estimates of the U.S. Department of Labor. 



A PERSPECTIVE OF PERSONNEL MANAGEMENT 19 

membership has been estimated at sixteen million. Of this number, the 
Congress of Industrial Organizations, formed in 1935 to unionize work- 
ers on a vertical or industry basis as compared with the horizontal or 
craft basis of the American Federation of Labor, has somewhere in the 
neighborhood of six million members. Independent unions not included 
in the AFL and the CIO account for the other two million. Prominent 
here are the United Mine Workers of America, the International As- 
sociation of Machinists, and the Railway Brotherhoods. 

3. Legislative Changes. As a consequence of the growing 
strength of unions, of disclosures by various groups of poor working 
conditions, of several costly strikes at the turn of the century, of an 
overly cautious restriction of labor by the courts, and of the more con- 
centrated voting power of labor, the federal congress and some state 
assemblies began to take notice of labor matters. Various legislation 
was enacted, covering such subjects as restrictions upon the use of in- 
junctions, outlawing of yellow-dog contracts, removal of labor unions 
from the scope of the antitrust laws, and the protection of the economic 
interest of labor in industrial disputes. Most labor legislation ( with the 
exception of that relating to industrial compensation ) traveled a rough 
road, especially through the courts; hence very little was actually ac- 
complished until after World War I. 

Beginning with a liberalization of the interpretation of the powers of 
the government in the field of public utilities, the movement to side 
with labor gained adherents. The Railway Labor Acts of 1926 and 
1934 were a far step in this direction but were limited to public trans- 
portation. Not until the depression after 1929, which brought on the 
New Deal, however, did the government change its attitude in regard 
to helping labor. Quickly there came forth such legislation as the Na- 
tional Recovery Act, the National Labor Relations Act, the Social Se- 
curity Act, the Fair Labor Standards Act. And after World War II, the 
significant Labor Management Relations Act was passed in 1947. 

Most of this legislation was predicated upon changed concepts of in- 
terstate commerce and industry's social responsibilities. On the one 
hand, the federal congress proceeded upon the assumption (with which 
the courts largely concurred) that manufacturing and labor matters 
came within the province of interstate commerce. As such, they were 
consequently subject to federal regulation. On the other hand, there 
was a growing feeling that the economic security of labor was more or 
less a responsibility of industry. This view found favor, not because in- 
dustry was necessarily at fault for economic crises, but because it was 
considered best able to assume the burden that the crises brought on. 



20 PERSONNEL MANAGEMENT 

Thus the federal government in all its branches — legislative, judi- 
cial, and executive ( the latter in particular in recent years ) — and many 
of the state assemblies have moved in the direction of strengthening 
the position of labor. The growth in number and strength of regulatory 
bodies is disturbing to some. They see the struggle over labor problems 
taking on more of the aspects of a continued fight between such agen- 
cies and management. They would prefer that such matters be handled 
by labor and management themselves. 

Some contend that there is an undue bias in favor of labor. Perhaps 
this is so, because there are signs that the federal government, tiring of 
watching labor and management become overbearing at times, tends to 
view labor disputes more from the viewpoint of the public interest. Be 
that as it may, the point of this section, that the government has thrown 
much more weight to the side of labor, is abundantly evident. 

RELATIONS OF LABOR TO MANAGEMENT 

In the course of the foregoing changes, there has naturally come a 
significant change in labor's relation to the employer. The era of un- 
questioning acceptance of the decisions of the employer is on the wane. 
So, too, is the era of subservient labor. In their place looms a scene in 
which the working population is more or less articulate, highly organ- 
ized, and politically potent. Labor not only has strong views regarding 
what it wants and the position to which it aspires but also has shown 
that it knows how to and can achieve its objectives. This does not mean 
that labor and employer are destined to an era of warfare. On the con- 
trary, it might well be argued that equalization of strength is a pre- 
requisite to more co-operative effort and mutual understanding of each 
other's problems. Indeed, labor-management relations that have de- 
veloped in such industries as clothing, printing, and the steel industry on 
such matters as joint job evaluation, for example, are highly encourag- 
ing that co-operation is not a dreamer's ideal. 

And it is important to repeat that these descriptions of change are 
intended, not to arouse arguments regarding the relative merits of the 
positions of labor and the employer, but to warn the student of person- 
nel work that it is necessary to be alert to changes in fundamental con- 
ditions. Unless information on such changes is gathered and assimilated, 
it is impossible to establish effective personnel policies and programs. 

CONCEPTS OF LABOR 

Another perspective of this field may be taken by examining the at- 
titudes which employers have taken toward labor. Although there have 



A PERSPECTIVE OF PERSONNEL MANAGEMENT 21 

been historical trends, there is much overlapping, so that it cannot be 
said either that one concept was held until such and such a date or that 
all are agreed upon a particular point of view at the present. 

Until the turn of the present century, the most widely held view of 
labor was undoubtedly that it was just another factor of production. As 
such, it was to be handled like any other technical or economic resource 
of production. The main considerations were costs and returns. This 
meant, of course, that the emotional and social needs or characteristics of 
the individual were not the concern of the entrepreneur. Indeed, where 
these aspects were not actually frowned upon as being alien to the busi- 
ness scene, they certainly were disregarded. Perhaps something could be 
said for this concept if the emotional and social characteristics of labor 
could be segregated from, and did not influence, the working situation. 
Such, however, is obviously and simply impossible. Hence this attitude 
toward labor has proved untenable, although occasionally some em- 
ployers may be seen casting longing glances in that direction. 

As the weaknesses of the "factor-of -production" concept became 
more apparent, consideration began to be given to the human aspects of 
labor. This has taken a number of directions. Some employers have con- 
tended that, while human needs must be considered, they themselves are 
the best judges of how this should be done industrywise. And so, soon 
after 1900, a number of companies initiated personnel departments in- 
corporating recreational, pension, and insurance programs. Where this 
approach has been sponsored in terms of what the employer thought 
was good for the employee, it has been given the name "paternalism." 

Many who adopted this concept, however, found that the employees 
did not appreciate their well-intended efforts; some employees even 
went out on strike. As a result, two divergent paths have been taken. 
On the one hand, some companies have followed a hands-off policy. 
While they recognize that human values are involved in production, 
they contend that, because good wages and working conditions are pro- 
vided, each employee will be in a position to take care of himself ac- 
cording to his own standards of what is "good" for him. Unfortunately 
for those who hold such views, pressures of competition, community 
practices, and union demands force them away from the course they 
would like to pursue. 

On the other hand, there is a strengthening trend in the direction of 
co-operation between labor and management in attacking the human 
problems of labor. This co-operation may be on an individual or union 
basis, and it may be on a small scale or on an over-all basis. In any 
event, it represents an acceptance by industry of its "social responsibili- 



22 PERSONNEL MANAGEMENT 

ties." To this end, the employer not only takes no steps which might 
harm the social and economic interests of labor but also takes positive 
steps to provide adequate bases of security and personal satisfaction. The 
assumptions here are that, if the personal and emotional needs of labor 
are assured and if this is done with the concurrence of labor, the tech- 
nical skills of labor will be applied more effectively for the benefit of all. 

In recent years the "human" aspect of labor has been expanded to 
stress sociological factors. There is growing recognition of the fact that 
labor must be "handled" not only in terms of individual characteristics 
but also in terms of its group reactions and needs. Thus lack of success 
in the past is ascribed to a failure to recognize that effectiveness and 
loyalty are conditioned as much by what an employee feels his fellow 
employees feel about his status in a group as by what he individually 
might like to do or say. From such studies as have been made of condi- 
tions where this concept has not been and has been followed, it seems 
to possess much in its favor as a desirable viewpoint to take in working 
with labor. 

Another concept of labor which has pushed itself into the foreground 
is derived from the political power of labor. At one time this concept 
had little weight. In the case of the Knights of Labor, entrance into the 
political arena helped to bring about its decline. But since the 1930's 
the political power of labor cannot be doubted. Both the CIO with its 
Political Action Committee and more recently the AFL with its Labor's 
Educational and Political League give indication that, in addition to 
other political methods, the movement of labor both directly and indi- 
rectly in politics is likely to accelerate rather than slow down. And this 
applies to local and state levels as well as the federal level. 

Political action in national and local politics finds its counterpart 
within the business enterprise. Certainly the term, "industrial democ- 
racy," which is often heard, refers to more direct participation in indus- 
trial affairs that affect the interests of labor. This goes beyond the nor- 
mal role and mode of operation of the union. It implies a movement in 
the direction of a "partnership," in which many, if not all, major deci- 
sions in a business will be a matter of direct concern to labor as well as 
management. This has been formalized under the designation "co- 
determination" in Germany, where labor has by law been given a sig- 
nificant place on the board of directors of business concerns. Although 
the movement has not gained much headway here, it nonetheless repre- 
sents a concept of labor which cannot be discounted. 

In summary, management may approach its dealings with labor from 
any one of several viewpoints: the economic or "factor-of -production," 



A PERSPECTIVE OF PERSONNEL MANAGEMENT 23 

various shades of the human and social, and various degrees of political 
and partnership. All have some bearing upon the matter of how to "get 
along" with labor in the best interests of all. It does seem that those 
who are giving greater weight to the human, social, and democratic as- 
spects are more likely to be successful in their labor-management solu- 
tions. At least, this appears to be true for the foreseeable future. 

PRESENT AND FUTURE PROSPECTS 

Our present relations between labor and management stem from the 
past and will change as time goes on. By being aware of the forces that 
make for these dynamic changes, personnel management will be better 
prepared to deal with current problems and future uncertainties. What 
can be done in these matters can perhaps best be examined in terms of 
the following: 

1. Possible approaches to personnel problems 

2. Obstacles to completely satisfactory solutions 

3. Factors contributing to better relations 

4. Changing philosophies 

APPROACHES TO PERSONNEL PROBLEMS 

A number of approaches may be used by management in tackling the 
problems with which it is confronted. These may be classified into two 
large groups according to, first, the extent to which problems are antici- 
pated and, second, the nature of facts brought to bear upon labor-man- 
agement problems. 

1. Cure and Prevention. Looking, first, at the extent to which 
problems are anticipated, personnel management can tackle problems 
after or before they develop. For example, after an employee expresses 
resentment or belligerence, after a work stoppage occurs, or after a super- 
visor is faced with non-co-operation, steps are taken to correct the situa- 
tion. Unfortunately, personnel management has been characterized 
largely by the use of curative methods. 

There is a distinct trend toward the use of preventive measures. 
Management is attempting more frequently to anticipate possible 
sources of trouble or irritation and to take steps to minimize or eliminate 
the development of problems. Job evaluation and merit rating plans, to 
be discussed later in this book, are cases in point. By working out the 
relative value of various jobs in a company, it is possible to show em- 
ployees why their respective jobs are worth a given amount in compari- 
son with others. Thus grievances about wage rates that would otherwise 



24 PERSONNEL MANAGEMENT 

arise may be minimized. Or, by making periodic ratings of employees, 
it is possible currently to show employees why they are or are not mak- 
ing progress. This helps reduce the number of situations in which some 
employees, to their disappointment, are unexpectedly informed that 
they cannot expect to progress any further in the company. 

There are also those who are cognizant of the need of positive meas- 
ures to maintain the equilibrium when relations between labor and 
management are said to be good. Such a desirable state of affairs is not 
looked upon as a lucky occurrence or one over which no control may be 
exercised. Rather it is considered important to study the signs, condi- 
tions, and causes of such a happy state of affairs so that its maintenance 
may be positively influenced. For example, recent studies of companies 
that have experienced long years of relatively satisfactory relations may 
provide personnel management with better suggestions than can the 
studies which stem from cases in which trouble has occurred. The anal- 
ogy to this is the matter of studying healthy individuals as well as those 
who are ill. Certainly the general tenor of labor-management relations 
would be improved if those involved here were to raise their sights so 
that a healthy body of relations was the accepted standard of attainment. 

Since problems seem to be the focal point of so much thinking in the 
field of personnel management, the question of prevention or cure will 
always be with us. Preventive measures, when they can be used, are 
obviously to be preferred to curative measures of personnel manage- 
ment. They are generally less expensive than curative measures, and 
they are more effective because they reduce the number of problems that 
must be handled. For example, careful selection of employees will re- 
duce, among other things, the amount of training that need be given 
and the number of dissatisfied employees on the payroll. Moreover, 
preventive measures reduce the seemingly inevitable recriminations that 
flow from the application of curative solutions to such problems as griev- 
ances, disciplinary action, and hit-or-miss spot transfers when vacancies 
"unexpectedly" occur. 

On the other hand, preventive measures call for a high degree of 
planning ability, foresight, and positive leadership in the personnel 
executive. These qualities can be cultivated and are worth cultivating. 
Although it is admitted that all problems of personnel cannot be antici- 
pated and that, therefore, curative or "after-the-act" methods of solving 
personnel problems cannot be entirely discarded, nevertheless a signifi- 
cant test of a personnel executive is his ability to detect areas of friction 
and to develop plans to forestall their growth. Indeed, when personnel 
management assumes a dynamic, positive approach, looking toward 



A PERSPECTIVE OF PERSONNEL MANAGEMENT 25 

constructive improvements in labor-management relations and interests, 
it will meet constructively the challenge of the future. 

Thus it is important, when talking about a specific personnel prob- 
lem, to know whether it is one that has developed or is likely to develop 
and is, therefore, to be headed off, if possible. The emphasis, type of 
thinking, and qualities of leadership to be exercised will differ. For 
example, what should be done after a strike occurs differs from what 
should be done to try to prevent a strike. What might have worked 
in the prevention of a strike would likely be futile after a plant is struck. 
In short, the adage of "crying about spilled milk" is applicable to per- 
sonnel management. What can be done in a given situation depends 
upon whether we are looking forward or backward, and which view we 
take depends upon the nature of the problem. Has it happened? Or is it 
likely to happen? 

2. Factual Basis of Labor Problems. Another way of looking 
at the approach to labor problems which personnel management em- 
ploys is to note the basis used to solve problems. Such solutions may be 
founded upon one's own experiences, upon the experiences of others, or 
upon "scientific" analysis of problems. 

Under the first-mentioned plan, the personnel executive reaches deci- 
sions in terms of his own experience, which are subject, therefore, to the 
wisdom which a limited personal experience can provide. When a prob- 
lem is encountered, a decision is reached that the executive hopes will 
work; if it does not, then it is a case of "try something else." This is, in 
other words, a cut-and-try, hit-or-miss, or rule-of -thumb system. It is very 
simple and quick in execution but highly unpredictable in results. Nev- 
ertheless, it is undoubtedly the most widely used plan in personnel as 
well as other fields of management. This is unfortunate because such 
methods have so small a logical basis of explanation. Moreover, labor 
can have little confidence in a management that uses such an approach 
because it cannot check whether or not the decisions being taken are 
wise and justifiable. 

Next, the executive may add the experience of others to his own be- 
fore reaching a decision on labor problems. By means of attendance at 
conventions, discussions with various experts, visits to the plants of 
others, and study of business literature, the executive broadens the hori- 
zons of his limited experience. When a problem arises, the executive at- 
tempts to find in his files or his memory a plan or solution which someone 
else has used with success in similar circumstances. The selected plan is 
then applied to his own problem. This scheme for solving labor prob- 
lems is relatively simple, not too expensive to use, and hence rather fre- 



26 PERSONNEL MANAGEMENT 

quently applied. But finding plans of others that will fit one's own prob- 
lems is often equivalent to looking for the proverbial needle in a 
haystack. Conditions in the plants or offices of others are seldom quite 
like one's own, and insignificant differences in conditions of application 
are enough to cause significant differences in ultimate results. And when 
one tries to explain to labor why the plan of a given company was 
selected, one may find a counterproposal that the plan of some other 
company should be chosen. 

Finally, some executives attempt to solve their problems by scien- 
tific methods. Under this method, solutions are sought by gathering, 
analyzing, classifying, and interpreting pertinent data. Starting with a 
careful statement of the problem, the scientific system includes such 
major steps as establishing a working hypothesis, collecting data, reach- 
ing a tentative solution, checking the solution, and then applying the 
solution. Obviously, such an approach to problems of labor is time- 
consuming, often costly, and invariably calls for close attention to de- 
tails. Hence this approach, though the best in theory, is the hardest 
to apply and hence the least frequently used. Yet it represents the line 
along which attempts must increasingly be made, since it is the only one 
that has a logical basis for continued success. And it is the only one in 
which both labor and management can join forces without fear that a 
solution prejudicial to the other is being sought. Since the emphasis is 
upon facts and logical analysis, the attention of both parties can be cen- 
tered upon problem solving rather than upon watching each other and 
detecting the "tricks" that might be played to gain a personal and un- 
deserved advantage. 

In this connection, too, it is well to note that various sciences and arts 
have made and are likely to make even more significant contributions to 
better solutions to problems. As noted in the next few pages, such areas 
as psychology, sociology, and economics have been giving increased at- 
tention to more precise measurements and interpretations of labor-man- 
agement relations. Hence there are firmer grounds for concluding that 
the future will bring better and improved methods of dealing with such 
problems. 

OBSTACLES IN THE PATH OF PERSONNEL MANAGEMENT 

It is well to recognize that the problems that confront personnel 
management are by no means simple. It is not child's play to tussle with 
such issues as fair wages, the way in which labor should exercise its 
voice in matters of interest to it, reactions to the political activities, and 
how far one has a right to go into matters pertaining to private lives and 
community affairs. 



A PERSPECTIVE OF PERSONNEL MANAGEMENT 27 

Complex though these problems are themselves, their solutions are 
made even more difficult by the following obstructions: 

1. Precise methods of measuring labor's interests or contributions are lacking. 

2. The human factor is difficult to interpret, and its probable future actions 
are difficult to forecast. 

3. The common human shortcomings of ignorance, selfishness, and prejudice 
interfere with the applications of logical methods 

If these obstructions could be removed, a long stride would be taken 
in reducing labor problems. For example, how much room for argu- 
ment between management and labor could there be if a measuring 
device were available that could determine precisely what labor in a 
given case was worth? Imagine how quickly wage disputes could be 
settled with a "thermometer of wage rates." But such a device is non- 
existent, and it is improbable that one will be developed in the foresee- 
able future. Of course, methods of giving approximate answers are 
available, but they all leave much to be desired. Is it any wonder, there- 
fore, that disputants over wage matters have recourse so often to tests 
of power in order to reach decisions in their quarrels? And is it any 
wonder, then, that labor-management problems, handled thus, have a 
habit of recurring? 

The human factor also is a source of perplexing problems. On the 
one hand, it acts in ways that are often difficult to understand, let alone 
forecast. On the other hand, even the fairest of people is not above 
some selfishness or ignorance — sometimes reasonably so and sometimes 
not. Although it may be argued that the human race is improving in 
these matters, we still have a long way to go in learning how to live to- 
gether peacefully and equitably. 

These difficulties are cited as a warning to the student to be realistic 
about personnel matters. It would be much better if "logic" could al- 
way be used by the personnel manager. Unfortunately, the perversity 
of nature and man must be considered. When "hit-or-miss" methods 
must sometimes be used, this should not give rise to cynicism; rather, it 
is only realistic to recognize the complete nature of things as they are. 
Moreover, there is no reason under such conditions why improvement 
rather than artificial perfection should be the test of results achieved. 

FACTORS CONTRIBUTING TO BETTER RELATIONS 

At this juncture it is well to stop for a moment and give credit to a 
number of fields of human knowledge which have contributed greatly 
to the improved solution of problems with which personnel manage- 
ment must deal. For example, from the area of psychology have come 
many of the principles and techniques applied in such fields as testing, 



28 PERSONNEL MANAGEMENT 

interviewing, counseling, research, training, and motivation. To students 
of scientific management, personnel is indebted for contributions per- 
taining to the organization, direction, and administration of labor- 
management relations. From sociology, anthropology, and ethnology in 
recent years has come invaluable assistance in terms of group reactions 
and relationships, the influence of cultural and community patterns, and 
the significance of dynamic changes in such areas. To such fields as 
medicine and engineering, personnel management has for a long time 
been indebted for effective contributions in the areas of health, safety, 
accident prevention, and improved working conditions. And there are 
specialists such as statisticians, economists, and political scientists, whose 
very titles are sufficient to evoke clear pictures of the services they per- 
form. From all these have come in recent years such advancements as 
operations research, cybernetics, and linear programming, which can aid 
in improving personnel planning and control. 

A mere enumeration of these various areas of specialization is im- 
pressive evidence of the caliber of science and advanced art which is 
being brought to play in the area of personnel management. It indicates, 
on the one hand, the resources which can be brought to bear upon per- 
sonnel problems. It indicates, on the other hand, the heavy responsibility 
which a personnel manager assumes in being sufficiently well acquainted 
with these subjects that he may use wisely the competence available in 
these fields. In short, the wise personnel manager seeks the aid of ex- 
perts; he does not try to "do it all himself." He is aware of their capaci- 
ties for service and is grateful for them. 

A CHANGING PHILOSOPHY 

From the perspectives that have been taken of the field, it is apparent 
that there is a striking change in the philosophy of management toward 
labor-management relations. How far or how fast this change will pro- 
gress, no one can forecast. But it seems obvious that there is a trend in 
the direction of building personnel programs more and more in terms of 
labor's interests, labor's participation, and labor's characteristics. 

While this change in direction has been accelerated by the pressures 
of union organization, impetus has also been provided by a change in 
fundamental management philosophy. As little as twenty-five years ago 
the prevailing attitude toward labor problems was that management 
alone should decide how these were to be handled; and this point of 
view was generally supported by a hit-or-miss method of solving such 
problems as management cared to consider. 

Now one sees both a new attitude and a new methodology gaining 



A PERSPECTIVE OF PERSONNEL MANAGEMENT 29 

managerial adherents. Labor problems are, on the one hand, being ex- 
amined in the light of their emotional, sociological, and political impli- 
cations. Such examinations are being extended beyond the borders of 
what happens in a particular company to the implications for the com- 
munity, the nation, and even other countries. And the examinations are 
being based more and more upon factual analysis and scientific study. 
This changes the basis of solution from a personal one to a concerted 
attack upon problems by both labor and management. As an example, 
there are cases in which labor, as represented by unions, and manage- 
ment are jointly recognizing and attacking such problems as the need for 
cost reduction, thus eliminating the previous wrangles over attempts to 
undercut one another when cost reductions were sought. 

There seems little doubt that the future will find increased participa- 
tion by labor in labor-management relations. If this participation is to 
be of a high level, labor must be educated in the implications of these 
relations. Personnel management can do much in this regard. Through 
better communications between labor and management and through 
education in economics — which a number of companies have already 
undertaken — future relations can be improved. But more companies 
must adopt such programs. And more must seek to determine how all 
segments in our business enterprises can work together toward common 
objectives. The future must bring effective co-operation and less em- 
phasis upon tests of strength. 

QUESTIONS AND PROBLEMS 

1. Are there evidences of historical change in your own community relative to 
labor-management relations? What are they, and what is their significance? 

2. Not until recent years has any considerable number of students or prac- 
titioners of personnel management given much weight to the sociological 
aspects of labor-management relations. What is your opinion of this 
belated recognition? 

3. How has the cultural and social background of labor in the United States 
changed since the Civil War? What effect have such changes had upon 
labor-management relations? 

4. Explain the influence of immigration and size of communities upon the 
problems of labor relations. 

5. If the "status" a person has depends upon so many factors apart from what 
has usually been considered "the normal working situation," what right has 
industry to interest itself in such matters? Cite some of these "factors" in 
your discussion. 

6. If modern industrial conditions and modern community conditions have 
such an unstabilizing effect upon workers, what hope is there for the future? 



30 PERSONNEL MANAGEMENT 

7. What suggestions have you in regard to the problem of how to create in- 
terest for the worker in his job, which at present seems to be repetitive, 
monotonous, and uninspiring? 

8. How have technological changes affected the growth of personnel manage- 
ment? 

9. Indicate the differences to labor of the short-run and long-run effects of 
"technological unemployment." 

10. It has been estimated that the average investment in equipment per em- 
ployee is $10,000 in some industries. What has this to do with labor- 
management relations? 

11. Do you view the greater role of government in labor-management relations 
with favor or disfavor? Cite examples of trends that please or displease you. 

12. How has the relation of government to labor and business changed since 
the Civil War? To what causes would you attribute such changes? 

13. When were the AFL and the CIO formed? How would you describe the 
times when they were formed and the growth which they have experienced? 

14. The concept that industry should accept responsibility for labor's economic 
security is based upon what grounds? Do you expect this concept to be 
extended in the future? Why or why not? 

15. Can you cite any labor legislation which indicates that some employee wants 
must be protected by statutes? 

16. Why is it that most managements seem to prefer the use of curative meth- 
ods? Is it due to the ineffectiveness, relatively speaking, of the preventive 
methods? 

17. What obstacles stand in the way of perfect solutions to labor problems? 
What room is there for optimism even though perfect solutions are never 
obtained? 

18. Since "logic" cannot always be brought to bear upon the solution of labor 
problems, what are the alternatives? What safeguards or warnings would 
you suggest for the alternatives? 

19. When the personnel manager avails himself of the services of various ex- 
perts, such as statisticians and psychologists, how does that affect his own 
status? Does he become less important or not? Why? 

20. What do you expect will be the status of personnel management a quarter 
of a century hence? You might find it of interest to write out your forecast 
and save it, to be checked at that later date. 



CHAPTER 



3 



Personnel Programming 



SCOPE AND IMPORTANCE OF PERSONNEL PROGRAMMING 

A personnel program is a plan designed to aid in the accomplishment 
of desired objectives of business and of labor. It would seem a common- 
place that the various phases of personnel work should be tied together 
into an integrated plan. Yet no better suggestion than this could be fol- 
lowed by anyone who works in the field of personnel management. 
Throughout one's associations in this field, this advice should be a guid- 
ing rule. Its importance is soon apparent to anyone who operates with- 
out such a plan. In such instances there are contradictions between objec- 
tives and policies, gaps in functions, and incorrectly staffed functions. 
The results are confusing and frustrating to all concerned. 

On the other hand, a well-knit program is like a completed jigsaw 
puzzle. Each function of personnel relations complements the others. 
Good selection procedures, for example, reduce excessive training and 
abet good training. Or the disciplinary policies followed by a supervisor 
in one department are the same as those followed by others. As a con- 
sequence, consistency and uniformity characterize disciplinary cases. 
Again, such work as employee merit rating is restricted to what it can 
do and is not used as a shaky substitute for a poor job evaluation pro- 
gram or an ill-advised promotional system. And auditing of personnel 
work is not an afterthought but is planned for at the same time as the 
activities which the auditing procedure is intended to check. 

Programming is, therefore, a recognition of the very important fact 
that all parts of personnel work are interacting. What happens in a 
given phase of personnel work sooner or later has an effect upon other 
phases. Hence, when one contemplates following a particular personnel 
course, one must weigh what affect it will have upon, and how it is af- 
fected by, other functions. It is not feasible in a textbook to show in each 
chapter the effect of the materials in other chapters. Yet this idea of in- 
terrelationships is a practical truism and must be constantly remembered 
by the practitioner in personnel relations. 

31 



32 PERSONNEL MANAGEMENT 

To aid in understanding this idea of interrelationships, this chapter 
is devoted to programming. It must be noted at once, however, that the 
technical functions blueprinted by a program will be taken up in detail 
in subsequent chapters. Attention here will be turned to the parts of 
programming and the work that must be done in preparing a program. 
In particular, the discussion here on programming is taken up under the 
following headings: 

1. Objectives to be sought through the program 

2. Functions to be performed in seeking desired objectives 

3. Assignment of responsibility for performance of functions 

4. Policies guiding those responsible for programs 

5. Principles upon which programs are based 

6. Research needs of programming. 

OBJECTIVES 
THE IMPORTANCE OF OBJECTIVES 

Perhaps the most fundamental factor in a personnel program is that 
of objectives. It is impossible, on the one hand, to establish effective 
personnel plans until one has definite ideas of what results one hopes to 
accomplish. For example, an effective hiring procedure cannot be de- 
signed until an estimate is obtained of the kinds and amounts of labor 
to be hired. Or a morale-building program cannot be designed just to 
raise morale; it must be based upon some definition of the amount or 
degree by which it is hoped to increase the willingness to co-operate. To 
cite but one more example, a pension plan, to be successful, must tie in 
with definitely stated employee desires as well as company goals. 

On the other hand, it is difficult to prescribe remedies for personnel 
troubles that have developed if one does not know what the results 
should have been. Practical problems are often difficult to handle be- 
cause frequently no one seems to have bothered in advance to determine, 
for instance, what a satisfactory wage rate is, how much a given em- 
ployee should produce in a given day, or upon what basis transfers 
would be made. Unless definite goals are predetermined, it is difficult to 
determine what should be done after trouble develops. Moreover, when 
objectives are established after trouble ensues, employees often become 
very suspicious because they invariably conclude that the executives are 
making a case to suit themselves. 

CLASSES OF PERSONNEL OBJECTIVES 

To develop a concept of personnel objectives, it is necessary to study 
the objectives of the company of which personnel is a part. In general, 
the aims of most companies can be summed up as follows: 



PERSONNEL PROGRAMMING 33 

1. Primary objectives 

a) Produce and distribute an acceptable product or service 

b) Continuously yield satisfactory wages and salaries and other, personal 
values to employees and satisfactory profits to investors 

c) Meet community and social obligations 

2. Secondary objective 

a) Attain the primary objectives economically and effectively 

1. Service Objectives. At the outset, it is imperative to recog- 
ni2e the fundamental importance of the objective of service. Upon the 
successful attainment of this objective depends the attainment of all 
others. The performance of personnel functions must be directed, there- 
fore, with a view to their ultimate influence upon the efficient and eco- 
nomical production of goods and services. A program directed toward 
educating all concerned about this relation is highly desirable. Other- 
wise, employees, and executives as well, are likely to forget that business, 
industry, and commerce are institutions developed by society for the pur- 
pose of satisfying the desires of its members for goods and services. 

This may sound somewhat idealistic, but, if a given enterprise fails 
in this regard, it will be removed very realistically from the productive 
field by the liquidating process of bankruptcy. In other words, resources 
will no longer be allocated to it to continue unsuccessful operations. 
Looked at from the positive side, society rewards those who successfully 
produce goods and services by permitting them to continue to derive 
personal rewards and satisfactions from the business enterprise. In short, 
the successful servants of society — the successful producers — tend to 
make very satisfactory profits. 

Some individuals try, shortsightedly, to misuse the business institu- 
tion or take advantage of various interested groups in the institution. 
There is ample evidence of attempts to palm off inferior and shoddy 
merchandise, to cut wages unfairly, to employ cheap child and female 
labor to the ultimate disadvantage of the individuals concerned and of 
the community, and to charge exorbitant prices. Such practices even- 
tually bring on punitive action — labor may organize to protect its in- 
terests, consumers may turn to other producers, and the government 
may enact restrictive regulations. Though the mills of the gods grind 
slowly, they grind with certainty, and the producer who cuts corners, no 
matter how cleverly, eventually cuts one too many. 

Through all of its plans and programs, therefore, personnel manage- 
ment should seek to instill in employees an understanding of the sig- 
nificance of service and profits. Unfortunately, this has not been done 
enough. Even in cases where an attempt has been made to impart 
knowledge on these subjects, the need for such education too often has 



34 PERSONNEL MANAGEMENT 

not been recognized until after labor trouble has occurred or is about to 
occur. Discussion of service and profits at such times smacks too much 
of 'making cases." Hence it is far more effective to discuss these issues 
with employees while conditions are undisturbed; then the message is 
much more likely to gain acceptance and do good. 

Of course, the objectives of service, efficiency, and profits do not take 
precedence over the personal goals that employees seek, nor vice versa. 
Obviously, the goals of employees also must be attainable, or trouble 
will ensue. Hence personnel management must give due consideration 
to the desires of employees. But what are the personal goals which must 
be satisfied? 

2. Personal Objectives. It is not difficult to list the kinds of 
goals that are generally in the minds of employees; but the question of 
how much of each kind is desired is another matter. Detailed comments 
on this aspect will be made in subsequent chapters. The wants of em- 
ployees may be classified as follows : 

1. Fair wages, hours, and working conditions 

2. Economic security 

3. Opportunity for advancement and self -improvement 

4. Recognition and feeling of worth-while accomplishment and individual 
significance 

5. Positive group feeling 

a) Fair Wages and Working Conditions. The keystone of any per- 
sonnel program is an acceptable wage structure. Unless employees are 
reasonably satisfied that their wages are fair, it is invariably futile to ex- 
pect much good from other parts of a personnel program, such as recre- 
ational plans, company periodicals, suggestion systems, training plans, 
and insurance plans. Hence it is imperative, first, to establish as fair a 
wage policy as possible and, second, to seek to convince the employees 
of the intrinsic fairness of the plan. Even the best of wage plans will not 
meet expectations if employees, for one reason or another, will not ac- 
cept it or do not understand it and therefore are suspicious of it. The 
inherent fairness of a number of wage plans is offset by their complexity, 
and hence their use is inadvisable. 

In the matter of hours of work, there is less probability of trouble 
so long as rules governing working periods, rest periods, holidays, vaca- 
tions, and shift rotations are definitely stated, uniformly applied, and 
conform to general community practice. Unfortunately, these matters 
have often been considered only after grievances have stemmed from 
them. 

Working conditions also can be handled without too much difficulty, 



PERSONNEL PROGRAMMING 35 

so that employee morale is affected constructively. At least this is true 
of the physical aspects of working conditions, such as heating, lighting, 
equipment, safety devices, maintenance, and clean workplaces. How- 
ever, supervision — the nonphysical or human aspect of working condi- 
tions — is more difficult to manage and generally has caused trouble. 
Undoubtedly, many complaints of employees arise out of the failure of 
supervisors to work smoothly and capably with their subordinates. Yet 
the amount of attention required to clear up such situations is not exces- 
sive. It is, however, a mistaken attitude that human aspects of supervi- 
sion are easy to handle. 

b) Economic Security. Another group of personal objectives in 
which the employees are interested is that of economic security. It is a 
real fear that loss of work due to such events as accidents, seasonal or 
cyclical depressions, or inability to hold a job will reduce or remove in- 
come. To be sure, federal and state legislation has been enacted that 
serves to alleviate some of these losses, but a long road must be traveled 
before substantial relief is obtained. 

c) Opportunity for the Employees. Less tangible than the fore- 
going, and for that reason perhaps less frequently considered, is the 
desire of employees for the opportunity for self -improvement and ad- 
vancement. There is a subtle distinction here that must be grasped. Ob- 
viously, all employees do not want advancement and promotions; to 
many the responsibilities of new jobs are too great and the feeling of 
self-assurance in their present positions is too satisfying to give up. But 
there are very few employees who do not like to think that, if they 
wanted to get ahead, the opportunity for such development would be 
open to them. So long as the 'open-door" policy is maintained, em- 
ployees do not develop into less efficient workers by reason of the re- 
pressive feeling caused by having lost a rightful privilege. 

d) Individual Feeling of Significance. Perhaps modern business has 
been most negligent in the matter of making employees feel that their 
individual accomplishments are significant and worth while. The pat on 
the back, the word of encouragement, and the smile of sincere apprecia- 
tion are employed infrequently. Yet such rewards have their place along 
with financial compensation. Of course, insincere or ineptly given com- 
pliments are not suggested here; but experience in World War II indi- 
cated that when employees were shown the contributions they were 
making to the prosecution of the war, morale and output improved 
noticeably. Obviously, there is no use to pretend that employees can be 
convinced by such methods that their work is unalloyed pleasure. Nev- 
ertheless, employees on many routine jobs would be much more satisfied 



36 PERSONNEL MANAGEMENT 

and hence more effective if they were shown in various personal ways 
that their jobs are significant and that their efforts are appreciated. 

e) Group Feeling of Significance. There is growing recognition, 
too, that personnel management must build the feeling of significance 
that arises from group acceptance and status. How an employee feels 
about his job, for example, is vitally influenced by the opinions that 
fellow workers hold of his job. If a job is "inferior," the man holding 
it will feel inferior. That he may react negatively or "retaliate" against 
management should not, therefore, be surprising. Hence management 
should consider how status can be built into jobs so that this desired 
goal of employees can be attained. 

3. Community and Social Objectives. The final category of 
primary objectives is that of community and social obligations. Here a 
remarkable change has been in the making. Business is discarding the 
attitude of "It's none of our business," and adopting the attitude con- 
tained in an affirmative answer to the question, "Am I my brother's 
keeper?" 

Many forces for many years have been at work to bring about the 
realization that what happens within the walls and during the working 
hours of a business organization has an effect upon the community and, 
in turn, upon the efficiency of the business. For example, overworking 
employees, failure to provide safe working conditions, taking advantage 
of child labor, or sweatshop wage rates adversely affect the community. 
Eventually, there is a reaction against all business as well as the individ- 
ual enterprise. Legislation requiring compensation for losses arising out 
of accidents and health hazards is a case in point. It is not implied that 
industry in this case was callously unaware of these losses. Nevertheless, 
the failure of enough employers to do something constructive did lead 
eventually to the enactment of such legislation by all the states. In re- 
cent years, the passage of federal legislation creating unemployment 
insurance and old-age pensions is additional evidence of what happens 
when business itself has not (and, it can be argued, for good reason) 
accepted such social obligations itself. 

The extension of such legislation may not be at an end, as may be 
seen in the recurrent pressures on the federal government to underwrite 
programs to cover health and accident losses, dental care, and socialized 
medicine. Unless a particular enterprise concerns itself with the degree 
of responsibility that it should accept in the light of social ethics and 
community needs of the moment, it will only hasten the day of manda- 
tory acceptance of obligations or of some form of retribution unfavor- 
able to it. 



PERSONNEL PROGRAMMING 



37 



4. Secondary Objectives. All the foregoing objectives must in- 
variably be attained effectively and economically. This follows for the 
simple reason that society's resources are not unlimited. Therefore, the 
secondary objectives must always be considered along with the primary. 

In summary, the various objectives which the employer seeks and 
the interests which are of concern to employees may well be sought 
jointly through a good personnel program. This relation between ob- 
jectives and the program is aptly illustrated in Figure 1, developed by 
Professor Mee. 

FIGURE 1. Relation of Objectives, Personnel Program, and Leadership* 







Integration of interests < 


3f both employer 








and employees through cooperative effort. 










/ 


s> 




*ests 




Employee interests 




I 

Employer Intel 


1. 


Recognition as an individual. 


1. 


Lowest unit personnel cost 


2. 


Opportunity for expression or 


2. 


Maximum productivity of 




development. 




employees. 


3. 


Economic security* 


3. 


Availability and stability 


U. 


Interest in work. 




of employees. 


5. 


Safe-healthy work conditions. 


U. 


Loyalty of employees. 


6. 


Acceptable hours and wages. 


5. 


Cooperation of employees. 


7. 


Fair and efficient leadership. 


6. 


High organization morale. 






7. 


Intelligent initiative of 
employees. 




Executive I 


£ader 


ship 






* 


h 










Accomplished by 


means 


of a good 










Personnel Relat 


ions 1 


Program. 







* Source: John F. Mee, Management Organization for a Sound Personnel Relations Program (Bulletin 2) (Bloom- 
ington: Bureau of Business Research, School of Business, Indiana University, 1948), p. 2. 



FUNCTIONS 



NATURE OF FUNCTIONS 



Having established the objectives of personnel management, the 
next important question to be settled is that of how desired goals are to 
be attained. One of the prime factors in this connection is that of func- 
tions to be performed. 

"Functions" are the activities by the performance of which it is hoped 
to attain desired goals. Hence the kind and quality of functions chosen 
in any given case are affected by the objectives which a company seeks 
to attain. For example, in a company that lays great stress upon such per- 



38 PERSONNEL MANAGEMENT 

sonal objectives of employees as the desire for opportunity to get ahead 
or the desire for economic security, a number of duties will have to be 
undertaken that would be unnecessary if these objectives were not con- 
sidered. Or in a company that is conscious of the secondary objectives 
of economy and effectiveness of its personnel programs, control and 
audit functions will be installed which others would ignore. And a com- 
pany that proposes, for example, to set wages upon community levels 
must undertake surveys which are of no interest to those that follow a 
traditional or hit-or-miss system of setting wage differentials. Indeed, it 
may be concluded that the number and kind of functions performed in 
any company are dependent upon, first, the kind and quality of its per- 
sonnel objectives and, second, the economy and effectiveness with which 
it desires to attain these goals. 

Although details of actual practice vary considerably, the general 
outline of personnel functions is much the same among progressive 
companies. These functions fall into two major classes: operative and 
managerial. Since they have been described in the first chapter and will 
be taken up in detail in succeeding chapters, only a brief comment on 
each is needed now. The operative functions of personnel management 
include the activities specifically concerned with procuring, developing, 
utilizing, and maintaining an efficient working force. The managerial 
functions pertain to the activities concerned with planning, organizing, 
and controlling the work of those performing operative personnel func- 
tions. 

It is essential to grasp the significance of this dual division of per- 
sonnel functions if the mistake of becoming preoccupied with the de- 
mand of detailed problems to the neglect of managerial duties is to be 
avoided. It is easy, as many executives have learned to their regret, to be- 
come so busy with such tasks as hiring, transferring, counseling, and 
training that they fail to foresee shifting conditions which call for 
changes in operative functions, they fail to organize the work of subordi- 
nates satisfactorily, and they fail to keep a good check upon the work of 
subordinates. 

ASSIGNMENT OF RESPONSIBILITY 

The personnel program should also specify who is to be responsible 
for its preparation, execution, and control. In particular, three areas of 
responsibility need to be marked out. First, the exact role of -the staff 
personnel division needs to be noted. To what extent should it prepare 
programs and what line approval of its programs must it seek are ques- 
tions that need answering here. Second, the duties and responsibilities of 



PERSONNEL PROGRAMMING 39 

each member of the management team must be designated in regard to 
planning and executing the program. And, third, the relationship be- 
tween the staff and line executives needs to be clearly indicated as to 
their specific areas of authority, responsibility, and conditions of co- 
operation and consultation. 

These organizational relationships will be discussed more fully in 
the next chapter. Hence only a few comments on this aspect of program- 
ming are needed now. Of great import is the fact that the personnel 
division cannot and should not be made solely responsible for the per- 
sonnel program. Indeed, the greatest obligation must fall on the super- 
visors and executives who deal with people in their respective functional 
units. Moreover, it is increasingly apparent that responsibility for carry- 
ing out a program depends upon gaining the co-operation of union 
leadership in the objectives sought and in the personnel procedures 
utilized. And, finally, and perhaps most crucial, is the support — financial 
and administrative — that top management gives to the program and to 
those immediately concerned with carrying it out. 

PERSONNEL POLICIES 
NATURE 

The performance of personnel functions specified in a personnel pro- 
gram is significantly conditioned by personnel policies. Policies are basic 
rules established to govern functions so that they are performed in 
line with desired objectives. 1 They are a managerial device to restrain 
employees from performing undesirable functions or from mishandling 
specified functions. As an example of the former, a policy which states 
that unauthorized collections among employees shall not be permitted 
upon company premises upon penalty of discharge serves to prevent 
such activities from being performed. Or, as an example of the latter, a 
policy which states that candidates for employment shall be selected 
only from those who possess a grammar-school education or its equiva- 
lent serves to screen those who would, in the opinion of the company 
in question, fail to succeed, if employed. 

In other words, policies are fundamental guides to action. They serve 
to provide an answer to questions or problems that recur frequently. 
Hence they make it unnecessary for subordinates to refer to their super- 
visors a problem covered by a policy. Consider, as an example, the policy 

a To some, the term "policies" has reference to the basic principles or philosophy 
upon which an organization is built or operated. While such principles or philosophy 
are basic to policy making, it is preferred here to follow the more restricted connotation 
of "policy." 



40 PERSONNEL MANAGEMENT 

that all employees will be evaluated every four months to determine 
which deserve raises. This policy is restrictive, to be sure, in that the 
subject of raises is to be taken up only at specified time periods; but it 
states definitely when each employee can expect to have his record re- 
viewed, which certainly is not true in the absence of such a policy. As a 
consequence of this policy, when an executive is asked about raises, he 
can give a definite answer to a question which occurs frequently. And, 
of course, neither does he need to waste time in going to his superior to 
get an answer, nor, in turn, is the superior's time wasted in taking up 
these repetitious questions. 

EXAMPLE OF POLICIES 

The importance of personnel policies is evidenced by the number of 
companies that have prepared booklets covering their policies. Normally 
such booklets are entitled "Company Rules and Regulations." They 
carry the policies to which employees, supervisors, and executives are to 
conform while in the employ of the company. For example, the booklet 
of one company has the following index of subject matter of rules, regu- 
lations, and directions: 

Absence Hours of Work 

Accidents Ideas and Suggestions 

American Legion Interpreters 

Appearance Lateness 

Associated Hospital Plan Layoffs 

Attendance Legal Advice 

Bells Library 

Cafeteria Lockers 

Check Room Luncheon 

Consultation with Executives Members' Mutual Benefit Association . 

Contributions Members' Relations Committee 

Credit Union Overtime 

Discount Pass 

Dismissals To Resume Business 

Dress Regulations To Hospital 

Elevators Out of Building 

Employment Guarantee Personnel Policies 

Employment Policies Personnel Review 

Entrances Problems 

Financial Assistance Financial 

Gifts Legal 

Grievances Personal 

Health Promotions 

Holidays Ratings 

Home Early Records on Job Performance 

Hospital Recreation Rooms 



PERSONNEL PROGRAMMING 41 



Re-employment Social Security 

Re-instatement Sponsors 

Relief or Rest Suggestions 

Return to Work after Absence Telephones 

Review Method, Personnel Termination of Employment 

Salaries Policy Time — Recording of 

When Paid Training 

Unclaimed Transfers 

Savings Vacations 

Security on the Job Visitors 

Shopping Weddings 

Smoking 

1. Classes of Personnel Policies. The kinds and number of 
policies are many and varied. For purposes of ready reference they may 
be classified as follows: 

1. According to the level of the organization structure to which they apply — 

a) General company policies are broad rules to which all other policies 
must conform. 

b) Administrative policies are those established for the guidance of the 
top executive levels of the company. 

c) Operative policies are those established for the guidance of the lower- 
level executives who carry out the plans and programs of the top 
executives. 

d) Functional or staff policies are those which govern the personnel 
activities of specialized departments, such as accounting, engineering, 
and inspection. 

2. According to the subject matter covered by the policies, e.g., hiring, test- 
ing, health, safety, grievance handling, service, and recreational policies. 

2. Tests of Personnel Policies. Inasmuch as personnel poli- 
cies should be established with great care, it is desirable to adopt a stand- 
ard set of tests by which to judge whether or not any given policy pos- 
sesses the qualifications that make for a good policy. Among the tests 
which have been suggested are the following: 

1. Is the policy based upon a careful analysis of the objectives and ideals of 
the company? 

2. Is it definite, unambiguous, complete, and accurately stated? 

3. Is it reasonably stable and not subject to change because of temporary 
changes in existing conditions? 

4. Does it have sufficient flexibility to handle normal variations in condi- 
tions? 

5. Is it related to policies of other sections of the company so that a proper 
balance of complementary policies is established? 



42 PERSONNEL MANAGEMENT 

6. Is it known and understood by all who must work with it or are affected 
by it? 

In order that policies be maintained, as well as established, in line 
with such tests, it is invaribly desirable to have a plan for continually 
auditing and appraising rules and regulations. Such a plan might in- 
corporate some or all of the following: ( 1 ) review by committees; (2) 
suggestion systems; (3) customer complaints; (4) periodic audits; (5) 
employee grievances; and (6) executive reports. 

PRINCIPLES OF PERSONNEL MANAGEMENT 
NATURE 

Another important factor affecting the establishment and attainment 
of personnel objectives ( and, for that matter, the entire personnel pro- 
gram) is the set of principles which a company follows in labor rela- 
tions. By this is meant the standards of fairness, the basic attitudes of 
how to deal with people, and the basic knowledge which is brought to 
bear upon the topics encompassed within personnel management. With- 
out such principles, the solution of personnel problems becomes a mat- 
ter of expediency, uncertainty, and inconsistency — qualities certainly not 
conducive to the development of satisfactory morale. 

Unfortunately, there does not exist a set of principles that can be 
adopted without further thought and applied to one's problems. Each 
company must set for itself the task of establishing such principles. As 
conditions alter, as time and experience reveal, and as executives change, 
it will be found that principles should be modified or amended. But, in 
any case, where no conscious attempt is made to set such principles, im- 
perfect though they may be, personnel management sails an uncharted 
sea in a rudderless craft. 

SUGGESTED PRINCIPLES 

Without implying that the list is complete or should be adopted in 
all cases, the following discussion is illustrative of the lines along which 
a set of principles could be built. 

1. Establish fair levels of wages, hours, and working conditions. Al- 
though unassailable standards of fairness are not available and although 
everybody would not agree as to the exact meaning of fairness, never- 
theless the basic watchword of personnel management is fairness. Ex- 
haustive steps must be taken to establish levels of wages, hours, and 
working conditions which management, without reservation, feels are 
fair to all parties concerned. Anything less, sooner or later, will under- 



PERSONNEL PROGRAMMING 43 

mine a personnel program and the confidence of labor in management. 

2. Add to fairness the appearance of fairness. Be fair, but also ap- 
pear to be fair. This rule seems to have escaped the attention of many 
industrial leaders. What does it avail to attempt to be fair if that at- 
tempt is not placed in its true light or is overshadowed by an unfair 
appearance? For example, it may be company policy to pay, let us say, 
10 per cent more than other employers. This, it would seem, lends it- 
self to fairness. But the appearance of fairness can readily be spoiled 
by, first, selecting a complex plan of paying wages or, second, being 
niggardly in other matters. 

It is not argued here that appearance of fairness takes precedence 
over being fair (although some seem to follow the inversion of the 
rule) . Were an inverted policy adopted, the ultimate and certain discov- 
ery of unfairness would make irreparable the breach between labor and 
management. The maxim as stated here recognizes the simple truth that 
all of us are influenced more or less by how things are presented to us, 
as well as by what is presented. 

3. Supply employees with relevant information. There is little rea- 
son for believing that important information can be kept from em- 
ployees. As a permanent policy it cannot be done. Attempts to do this 
merely antagonize employees. Sooner or later the "hidden" information 
turns up, often in a form which tends to weaken the confidence of em- 
ployees in their company. 

Consider in this connection the case of a supervisor who, in order to 
answer a question of an employee regarding the profits of his company, 
turned to the superintendent for information. The latter, after inquiring 
up the line, told the supervisor that such data were neither available nor 
any of his concern. The supervisor returned empty-handed to the em- 
ployee, who later obtained the desired information from outside sources. 
As a consequence, he assumed that management was attempting to hide 
exorbitant profits, and the grievance which eventually resulted was han- 
dled to the disadvantage of the company. 

It does no good to argue that employees cannot understand and, 
therefore, are likely to misinterpret, for example, a profit-and-loss state- 
ment. Whether they can or not is irrelevant (for that matter, no one 
except the accountant who drew it "really" understands it) , because that 
is not the issue in the minds of the employees. To them, the availability 
of such a statement ( and particularly one drawn in a form designed for 
their benefit) is assurance that the company has nothing to hide. 

4. Make employees feel worth while and related. "Men do not live 
by bread alone" is a saying that applies to personnel. Of course, all of 



44 PERSONNEL MANAGEMENT 

us are anxious to get our pay envelopes; that is a morale booster, par- 
ticularly when it is bulging. But what about the intervals between pay- 
days? What is there then to maintain a favorable attitude? 

During this interlude there is a rich opportunity for morale building. 
Here is the time during which the employee must have encouragement 
that cannot be found solely in the pay envelope. Here is time during 
which a feeling of worth-while contribution, of the spirit of craftsman- 
ship, and of the satisfaction of accomplishment must be developed if 
levels of output are to continue high. 

It is important to re-emphasize that feelings of worth-whileness and 
relatedness are tied in not only with individual accomplishments but 
also with how well individuals are identified with their working groups. 
Hence personnel management should build and operate its programs so 
that such significance can be achieved. This means that group reactions, 
group customs, and group traditions are of great importance. 

In short, anything that serves to identify the worker with his com- 
pany or its products is a factor that lends itself to building the indis- 
pensable quality of worth-whileness. 

5. Eliminate all traces of "gift giving." Gift giving is not the prov- 
ince of industry, it is not wanted by employees, and it is rarely appre- 
ciated. When labor has earned something, then it is theirs without any 
strings attached. Moreover, gifts freely given often come to mean some- 
thing that must be continued as an earned obligation. 

Gifts are almost worthless as morale builders. Strong evidence of 
this may be found in the experience of so many industrial leaders who, 
finding themselves with disturbances on their hands, wonder why their 
employees can be ungrateful after all that has been given to them. There 
is no need for employees to feel grateful to the employer when they 
have done their jobs effectively. To disguise portions of actual earnings 
as gifts is to invite trouble when such practices are discovered in their 
true light. 

6. Build programs in terms of labor's reactions to them. In other 
words, do not treat workers as children. This rule is easier to state than 
to apply. Nevertheless, an executive who fails to appreciate in large 
measure how employees feel about their problems cannot reach highly 
satisfactory agreements with them. And this appreciation should relate 
to group, as well as individual, feelings. 

A case in point arises when employees post a grievance. Management 
must then seek to discover the motives and reasoning which led to the 
disagreement. In this search, the analysis must be made in terms of how 
the employees, and not solely how executives, think about labor's posi- 



PERSONNEL PROGRAMMING 45 

tion. And it does not help to assume that employees are acting illogi- 
cally. Unless an educational program can be brought to bear immedi- 
ately, the supposed irrationality must be accepted realistically; then 
every effort must be bent to reach a compromise solution rather than to 
continue the strife and make labor "see" the problem as management 
would, were it in labor's shoes. 

7. The intelligence or strength of labor should not be underesti- 
mated. In dealing with labor, organized or not, it is courting trouble to 
assume that employees are neither strong nor generally intelligent. 
Sometimes management so assumes because labor is often slow to move. 
And such mistakes have surprised many executives. Indeed, much labor 
unrest can be laid to a mistaken appraisal of the powers of labor. Once 
aroused, labor has shown that it knows not only what it wants but also 
how to get it. 

The results in the national scene find their counterpart in the indi- 
vidual company. It is much wiser for the employer to measure correctly 
the strength of labor than to risk the repercussions that stem from an 
underestimation of its powers. Moreover, when dealt with upon such a 
high plane, the employer protects himself from vindictive action when 
labor is in the saddle. 

An interesting point can be made here relative to the question of 
whether or not labor should have a voice in decisions affecting its in- 
terests. The question, though often debated, is irrelevant. Labor exerts 
an influence upon every decision that management reaches. When labor 
has no voice in bargaining, for example, it may "soldier, " it may seek 
employment elsewhere, or it may have recourse to the ballot box. In 
short, it acts indirectly when not invited to do so directly. Hence the 
question should be stated in terms of how and by what means labor 
should be brought into the mechanism of joint action. 

8. Allow. enough time to transmit, as well as to develop, programs. 
It should appear obvious, yet apparently does not, that policies and pro- 
grams that have taken perhaps months to develop cannot be assimilated 
by employees in the time it takes to read a notice on the bulletin board 
or time clock. On what grounds is it reasonable to assume that employ- 
ees can understand the implications of a posted notice over which the 
top executive struggled in reaching some semblance of agreement? Of 
course, there are none. 

Perhaps some might argue that it is not the place of employees to 
think of how or why — theirs but to "do and buy." In rebuttal it can be 
said that so long as employees are interested in the policies, it makes no 
difference whether they should or should not be interested. The realistic 



46 PERSONNEL MANAGEMENT 

position to take depends entirely upon the action which is likely to stem 
from their interest. 

Let there be no doubt that employees think, or think that they think, 
about such programs. And where there is thought, there is bound to 
be action. The action may be helpful or harmful, depending, in the case 
of labor relations, upon the degree to which management has taken 
steps to clarify the reasons for and implications of policies to the satis- 
faction of all interested parties. 

9. Select carefully oral and written expressions. This warning con- 
stitutes perhaps a subheading under the preceding principle. Never- 
theless, it deserves emphasis because many of management's communica- 
tions are practically unintelligible. In this connection, there comes to 
mind a conference of foremen recently conducted by the writer. The 
topic for discussion at the time was that of wage incentive plans. One 
of the conferees volunteered to describe the plan used by his company. 
He took about ten minutes in this attempt and failed to make clear the 
nature of the plan to the experienced foremen present. How, then, could 
a "green" hand, let us say, have confidence, let alone understand, a plan 
which a supervisor could not describe? Thus it seems patent that it is not 
enough for management to have a clear understanding of proposed 
plans or policies; these must be expressed in terms known to the man at 
the bench or the machine. 

10. "Sell" personnel policies to the employees. If a company has a 
worth-while purpose, if its standards of fairness are high, in short, if it 
attempts to follow the best practices of human relations, then these pro- 
grams and ideals should be "sold" to the employees. Training, educa- 
tion, yes, even indoctrination, are justifiable. After all, if a company re- 
frains from undertaking the task of education, that does not mean that 
its employees will remain in a happy state of suspended educational 
balance — if not progressing, at least not retrogressing. 

On the contrary, the process of education continues willy-nilly. The 
issue really is what are the employees learning, how, and from whom? 
Since that is the issue, then the employer pays for a program of educa- 
tion whether or not he has a "formal" program. If he does pay for the 
education, he may as well establish a thoroughly considered program. 

11. Activate one's principles. In the last analysis, the real signifi- 
cance of one's principles will be found in whether or not they are a 
part of daily routines and executive acts. All the talk in the world is 
ineffective unless backed with action. Hence management should make 
its principles a part of all it does, so that employees can see before them 
the example which is preached and stated in oral and printed words. 



PERSONNEL PROGRAMMING 47 

In short, the "good" life must be lived by management in order that 
labor can be sure that what is said is really meant. 

APPLICATION OF PRINCIPLES 

The foregoing tests or rules, then, should be of help in the develop- 
ment or appraisal of any personnel program. Let us assume, for exam- 
ple, that a company desires to install a wage incentive plan under which 
employees would be paid, in addition to base rate for hours actually 
worked, a bonus of 100 per cent of time saved under standard task time. 
Without attempting to appraise the plan here, the scheme of analysis 
proposed would require a searching examination of this wage payment 
plan in terms of each of the foregoing statements. 

Some might object that such an analysis of every proposal would be 
expensive and time-consuming. To this objection, there are two answers. 
First, every proposal need not be examined with the same degree of care; 
the degree would depend upon the importance of the proposal. Second, 
and far more important, it is invariably cheaper to prevent than to cure 
labor disturbances. Who can gainsay that the immediate and long-run 
losses of one strike exceed the cost of a well-rounded organization and 
program of personnel work? 

RESEARCH NEEDS OF PROGRAMMING 

It should be apparent by this time that much information will be re- 
quired in programming personnel work. How well this job of collecting 
information is done will determine how successfully responsible execu- 
tives can reach decisions on personnel objectives, functions, policies, and 
principles. Reliance in such matters is often placed upon personal ex- 
perience or the experience of others. Yet it is contended here that much 
more emphasis will have to be placed upon logical, scientific research for 
needed information. 

A number of research tools are already available for these purposes 
and will be touched upon in later chapters. It is worth noting here, how- 
ever, a few examples of information gathering through research. Such 
techniques as job analysis and man specifications, merit rating and job 
evaluation analysis, procedural analysis, turnover and absenteeism 
studies, morale and attitude surveys, wage and salary surveys, and policy 
audits and evaluations can provide indispensable information basic to 
program development. Such investigations need not be perfect analyses 
of these subjects. Of course, the more thorough, the better. But, for all 
practical purposes, much data can be gathered with a minimum of fan- 



48 PERSONNEL MANAGEMENT 

fare and expenditure. There is needed only the sincere desire to seek 
facts for decisions in the place of personal hunches and limited experi- 
ence. 

The purpose of this chapter has been to call attention to certain basic 
factors to which consideration must be given early in the study or de- 
velopment of any personnel program. Decisions must be reached on 
such matters as objectives, functions, assignment of responsibilities, 
policies, and principles in building an effective personnel plan. Some be- 
lieve that such matters may be resolved by "cut-and-try" methods. But 
there is no short-cut solution to the complex problems of human rela- 
tions. The only hope, in the long run, to fair and equitable solutions is 
along the path of facts and information. Hence the subject of research 
has been given special emphasis in this chapter of programming. Re- 
search is without doubt the key to effective planning of personnel activi- 
ties. 

QUESTIONS AND PROBLEMS 

1. What are the purposes of a personnel program? Are the purposes solely for 
the interests of the company? 

2. Can you illustrate the argument that a personnel program serves to tie 
together various personnel activities? 

3. Make a list of personnel objectives. Which do you think are the most 
difficult to attain? 

4. How do secondary objectives differ from primary objectives? Why are 
both necessary? 

5. How would you prove in a given case that the investment in a personnel 
program was justified? 

6. How would you classify the wants of employees? Can you cite specific illus- 
trations in support of your classification? To what extent are these wants 
selfish? 

7. List some constructive suggestions as to how economic security may be 
achieved by employees. By efforts of employers. 

8. Do you believe it feasible for any company to include in its personnel 
program all the activities listed in the pages of this chapter? Which ones 
do you believe are performed less frequently and which more frequently? 

9. What are the purposes of personnel policies? Do employees have a voice 
in their determination? 

10. What is the relation between personnel policies and employee booklets of 
rules and regulations? 

11. How would you go about testing a policy in order to determine whether 
it was a "good" one? 

12. What is meant by a "principle" of personnel management? Distinguish 



PERSONNEL PROGRAMMING 49 

between policies and principles. Is it possible, except by luck, to establish 
policies without pre-establishing principles? 

13. If significance and worth-whileness are such important factors of motiva- 
tion, why are they not used more often? Are there any ways by which 
executives might be encouraged to use them more often? 

14. An executive desires to be friendly with his employees to assure them of 
his sincerity and interest in them. He fears, however, that employees may 
take advantage of him if he so acts. What suggestions do you have to offer 
him? 

15. Can such principles as those stated in the text be practiced in either a non- 
union or unionized shop with equal ease? Explain. 

16. How far would you go in supplying employees with company information? 
Would your answer be the same during a strike as during a period of 
relative peace? 

17. Why must personnel management seek to make employees feel worth-while 
and significant members of the company team? Can employees see this for 
themselves? 

18. Illustrate the truth of the statement (or contradict if you can) that em- 
ployee morale cannot be purchased. 

19- Is it necessary to "talk down" to employees? Distinguish between "talking 
down" and expressing oneself clearly. 

20. For a long time the owner of a medium-sized plant viewed his labor force 
as a technical factor of production and dealt with it as such. One of his 
fellow businessmen convinced him that he should be more of a humani- 
tarian, so he decided to do something for labor. He installed and main- 
tained an expensive recreational, athletic, and social program. In spite of 
this, the employees went out on strike not long afterward. When the strike 
was settled, the owner threw overboard all personnel activities except those 
concerned directly with wages, hours, working conditions, and collective 
bargaining. As he expressed it, "I got along without these frills when 
I first started. They didn't do any good; and, besides, labor is really not 
interested in anything much besides wages." What is your critical opinion 
of this case? 



CHAPTER 

Organization Structure 



4 



of Personnel Management 



IMPORTANCE OF ORGANIZATION STRUCTURE 

When one notes the number of employees, executives, and specialists 
whose efforts must be co-ordinated, it sometimes seems surprising that 
so much is actually accomplished in the average business concern. A 
partial, yet significant, explanation of this may be found in the contribu- 
tions made by the mechanisms of organization structure. This structure 
provides an invisible framework by which the work of various individ- 
uals is fitted into an effective team. It provides a means for assigning 
authority and responsibility to individuals, for communicating between 
experts at various levels, and for enforcing accountability. In short, it 
helps make possible the large and effective aggregations of employees 
we know today. 

If personnel management is to function correctly in such aggrega- 
tions, organizational understanding on the part of staff, as well as line, 
executives is a prerequisite. Such understanding is usually gained in 
casual fashion through the give-and-take of daily experiences. Better 
still, however, is understanding based upon a firm grasp of the theory 
and principles of design and operation of organization structure. When 
the personnel executive masters these matters, he not only can reduce 
disagreements that arise regarding his place on the company team but 
also can help instruct others on their logical personnel duties and re- 
lationships. 

SCOPE OF DISCUSSION 

The fundamental question to which organization structure is ex- 
pected to supply an answer is: How much and what kind of authority 
should be allocated to each person in the organization? For example, 
should a personnel department have complete authority over everybody 
in regard to personnel functions? Or should it have only the right to 
suggest how personnel functions should be performed by others? Or 
should it seek to develop and awaken appreciation of personnel respon- 

50 



ORGANIZATION STRUCTURE 51 

sibilities but leave the design of functions to the executives themselves? 
And should there be any differences in authority to be exercised during 
normal times as opposed to emergency periods? Unless these and similar 
questions are answered in advance, they will arise to plague all con- 
cerned at times when the attention of executives should be concentrated 
on more urgent issues or those that could not have been foreseen. 

These aspects of authority and responsibility have three major areas 
or directions of flow. They include an executive's relation, first, to the 
group he supervises; second, to his superiors; and, third, crosswise to 
other specialists in the company. The discussion that follows considers 
the variables in these personnel relations under the following headings: 

1. Formal types of organization structure 

2. Informal aspects of organization structure 

3. Relations between line and staff executives 

4. Factors in specific structural designs 

FORMAL TYPES OF ORGANIZATION STRUCTURE 

Although the formal organization structures of various companies 
differ from each other, for purposes of study it is possible to classify 
them into three major groups — the line, the line and staff, and the func- 
tional types of organization structure. Of the three, the most widely used 
is the line and staff type. It is discussed last here, however, because its 
characteristics stand out more clearly if the other two types are examined 
first. 

THE LINE FORM OF STRUCTURE 

The line form of organization structure (sometimes misnamed the 
"military" form because of the clear lines of authority) is the simplest 
and oldest type. A diagram of this type is shown in Figure 2 (p. 52). 

1. Characteristics. The distinguishing characteristics of this 
form of organization are few in number but, nevertheless, of great sig- 
nificance. In the first place, as may be seen in Figure 2, each person re- 
ports to one and only one superior. Thus each worker is responsible 
solely to the foreman of his department, who, in turn, is specifically re- 
sponsible solely to his superintendent. As a consequence of this undi- 
vided line of authority, each individual is given complete charge of the 
work assigned to him, subject only to the authority of the superior to 
whom he reports. 

In the second place, but not obvious on the face of an organization 
chart for the line type, the work of each person or executive revolves 



52 



PERSONNEL MANAGEMENT 






L 



directly around the production of goods and services, their distribution, 
or the financing of the business. Work assignments and executive as- 
signments are based upon divisions of these functions. As may be seen 
in Figure 2, in the sales part of the organization, for example, there 
are only sales executives and salespeople. It is obvious that each person 
or executive must perform for himself, subject only to whatever advice 
he can get from his superiors, all other duties ( such as personnel func- 
tions of hiring, training, wage determinations, etc. ) which may be help- 
ful to the performance of his primary tasks. 

2. Advantages. What are the advantages of the line form of or- 
ganization structure? First, it lends itself to a minimum of "buck pass- 
ing." When a supervisor has been given complete charge of his depart- 
ment, he cannot blame someone else if things go wrong. Since he is also 
his own personnel manager, for example, he is in no position to claim 
that he failed to receive adequate assistance in forestalling grievances 
that may arise. Second, so long as problems do not become too complex, 
decisions can be reached more quickly when problems arise. This fol- 



FIGURE 2. The Line Form of Organization Structure 



PRODUCTION 
MANAGER 



SHOP 
SUPERINTENDENT 



FOREMEN 



WORKERS 



PRESIDENT 



SALES MANAGER 



DIVISIONAL SALES 
MANAGERS 



LOCAL SALES 
MANAGERS 



SALESMEN 



FINANCIAL MANAGER 



TREASURER 



SUPERVISORS 



CLERKS 



lows because the person involved, if he has questions at all, need refer 
them only to his superior and not to a number of experts before it is 
decided how to handle a particular problem. Third, since the number 
and variety of executives are reduced to a minimum, the line type is 
relatively simple to understand, and hence it is easier for each person to 
know where he fits into the company's structure. 

3. Disadvantages. However, there are offsetting disadvantages. 
For one thing, it is difficult to find and train enough supervisors and 
other executives who can capably manage not only their primary work 



ORGANIZATION STRUCTURE 



53 



assignments but also all the subsidiary tasks that are related to the main 
task. A foreman may be a good technical man, for example, but it is 
asking a lot to expect him also to be an expert in human relations, em- 
ployment^ training, and motivation. Yet t hat is w hat the line form of 
organization presupposes. The usual result in such cases is that most 
supervisors and executives fall into the category of a "J ac k-of -all-trades 
but master of none." 

4^-Sphere of Best Usage. When, then, is the use of the line 
form desirable? The advantages of the line form tend to outweigh the 
disadvantages when, first, a company is relatively small; second, the 
executives at all levels and in all parts of the company are well seasoned; 
and, third, the problems of the company are neither complex nor chang- 
ing rapidly. Obviously, its sphere of usefulness is limited. 

THE FUNCTIONAL FORM OF STRUCTURE 

Of a nature quite different from the line form is the functional form 
of organization structure. This form is shown in Figure 3. In this dia- 



FIGURE 3. Th 


3 Functional 


Fc 


>rrr 


i of Ore 


ionization 


Structure 






PRESIDENT 






































PRODUCTION 
MANAGER 






PERSONNEL 
DEPARTMENT 






SALES MANAGER 








r 


1 


1 




























SHOP 
SUPERINTENDENTS 




EMPLOYMENT 




SERVICES 




DIVISIONAL SALES 
MANAGERS 




























FOREMEN 








LOCAL SALES 
MANAGERS 






















WORKERS 






SALESMEN 





gram the higher divisions of the structure, as well as complete details, 
have been omitted for sake of simplicity. 

1. Characteristics. The distinguishing feature of the functional 
form is striking — each person, except those at the top levels, in the pro- 
duction and distribution divisions reports to several superiors. When 
the lines of responsibility are traced, it is found that each person reports 
to each superior for only a specified phase of his work. For example, the 
local sales managers report to the divisional sales managers on sales 
matters, to the employment section on hiring problems, and to the per- 



54 PERSONNEL MANAGEMENT 

sonnel service section for such matters as personnel programs. Of course, 
if a complete chart had been drawn to include other functional experts, 
it would have shown that the sales managers also reported to an ac- 
countant, a commercial research director, and a traffic manager. 

2. Advantages. The significant advantage of the functional form 
is that each person has the opportunity to become an expert in his field 
of specialization. This division of functions among various specialists 
leaves the shop foreman, for example, free to concentrate upon his main 
job of directing and supervising operative employees. Another advan- 
tage is that subordinate personnel and executives are assured of better 
technical supervision, because each person to whom they report is sup- 
posed to be an expert in his field of specialization. For example, the shop 
foreman looks to the personnel department for leadership on personnel 
problems and not to the shop superintendent. Finally, it is easier to 
find people who are trainable in a few lines than it is to find and train 
supervisors in a wide variety of tasks. 

3. Disadvantages. This form of organization structure, however, 
suffers from serious disadvantages. Foremost is the evil of divided lines 
of authority. Although there is apparent clarity on paper in the lines 
drawn from a particular subordinate to his several superiors, it is not 
always easy to determine to which specialist to turn when in need of 
guidance. The inevitable twilight cases and overlapping functions throw 
a burden of choice upon the person who is often least qualified to make 
the right choice. When a poor choice is made, the subordinate, on the 
one hand, receives poor guidance and, on the other hand, often incurs 
the enmity of the other experts for not having turned to them. 

Another disadvantage flows from the normal human failing of ex- 
perts to work together smoothly when all seemingly have "equal" au- 
thority. Each is prone to feel that his specialty is actually not receiving 
attention equal to its importance. The inevitable result is futile squab- 
bling when the personnel director, for example, concludes that his au- 
thority to enforce labor policies is being nullified by the lack of appre- 
ciation which other experts, such as engineers, often have toward labor 
relations. 

Finally, the divided lines of authority are conducive to "buck pass- 
ing." When an employee spoils a part on a machine, for example, is 
this due to poor training, faulty materials, or inadequate machine main- 
tenance? Each of the experts would likely think it is due to shortcomings 
in the work of the other specialists. 

4. Field of Usage. Wherever the functional plan has been tried 
upon a broad scale, it has eventually failed. It seems that otherwise 



ORGANIZATION STRUCTURE 



55 



well-trained and reasonable people cannot avoid running afoul of the 
divided lines of authority of the functional form. When several people 
exercise authority over the same subordinates, but in different fields of 
specialization, they tend to dissipate their efforts in jurisdictional dis- 
putes. 

Then why discuss this form? First, because it serves to clarify the 
operation of the line and staff form, which is, in one sense, a cross of the 
line form and the functional form. Without a knowledge of the theory 
of the functional form, it is easy to miss the meaning of the line and 
staff form. Second, this form deserves discussion because its use upon a 
restricted or temporary basis is sometimes desirable. There are occasions 
when the personnel departments of given companies are delegated func- 
tional authority over line departments. This is an efficient way of han- 
dling emergency personnel problems or duties imposed by federal and 
state labor regulations. And, third, with the growth of automation, it 
may be practically necessary to place authority for such functions as 
communications and instructions in the hands of a centralized, func- 
tional expert. 

THE LINE AND STAFF FORM OF STRUCTURE 

As already noted, the most widely used form of organization struc- 
ture is the line and staff form. A simple diagram of it is shown in Fig- 
ure 4. 



FIGURE 4. The Line and Staff Form of Organization Structure 



PRODUCTION 
MANAGER 



SHOP 
SUPERINTENDENTS 



FOREMEN 



WORKERS 



PRESIDENT 



PERSONNEL 
DEPARTMENT 



EMPLOYMENT 



SERVICES 



i LINE AUTHORITY 
■STAFF AUTHORITY 



SALES MANAGER 



DIVISIONAL SALES 
MANAGERS 






LOCAL SALES 
MANAGERS 



SALESMEN 



1. Characteristics. Perhaps the most striking feature of the line 
and staff form is that in it each person reports to one and only one su- 



% PERSONNEL MANAGEMENT 

pervisor, yet receives specialized service and help from various experts. 
To illustrate, let us examine the hiring procedure, which is operated by 
the employment section of the personnel division, as shown in Figure 4. 
This unit screens applicants for jobs and then directs those selected as 
desirable employees to the supervisors for their acceptance or rejection. 
Since the employment unit cannot compel supervisors to follow its 
recommendations, the line of authority between the foreman and the 
superintendent remains undivided and the allegiance of the former to 
the latter is not placed in question. Of course, the personnel depart- 
ment should be operated so that its services will seldom be rejected; but, 
even though they never are, this should not lead to the conclusion that 
staff departments have any authority over those they serve. 

2. Advantages. The advantages of the line and staff form are 
readily apparent. First, the staff departments provide expert service, a 
matter of significant importance in this age of specialization. Second, 
since the specialists have no right to interfere with the authority of those 
they serve, the line and staff form has the advantage of a single line of 
accountability. In short, experts are available for service, but their serv- 
ices need not be accepted merely upon the recommendation of the staff 
executives. Obviously, it would ordinarily be foolish to refuse to avail 
oneself of such services, hence the line and staff form, in the third place, 
frees line executives so that they may concentrate upon their primary 
responsibilities. 

3. Disadvantages. As for disadvantages, the line and staff form 
has a few possible, but not necessarily unavoidable, shortcomings. In the 
first place, staff specialists, instead of offering their services on a volun- 
tary basis, attempt sometimes to force their suggestions and services 
upon others. In that event, subordinate executives become uncertain 
as to whether they should obey their immediate superiors or the dictates 
of the staff. This leads to the "divided-line" weakness of the functional 
form, but this difficulty can be avoided if staff experts are expressly 
warned against exceeding their assigned scope of activity. On the other 
hand, strict adherence to this rule may render the line and staff form 
ineffective under certain emergency conditions. For example, during 
the war years it was impossible to train large numbers of supervisors in 
all matters that ordinarily came within their jurisdictions. ^lany_cpiii- 
panies found it desirable, therefore, to turn such rights as that of dis- 
charge over to the personnel department. These allocations of authority 
are usually intended to be temporary, for it is hoped to return such rights 
to the supervisors as soon as they can handle their responsibility adeptly. 



ORGANIZATION STRUCTURE 57 

Certainly, if the line and staff principle had been kept inviolate in such 
cases, enough foremen could not have been trained to handle required 
duties within the limits of available time. 

4. Area of Usage. Except in small-sized enterprises, in which the 
line form of organization seems best suited, the line and staff has 
evolved as the best all-around type of organization structure. Of course, 
this form would seldom be as simple as that shown in Figure 4. Ordi- 
narily, there are numerous staff personnel — engineers, public relations 
experts, office help, accountants, lawyers, etc. — scattered throughout an 
organization. In any event, the key to this form of structure is that ex- 
perts should be brought into the organization when such services are 
needed and can be obtained at reasonable cost, but that they should not 
be permitted to intrude in the lines of authority of those whom they 
presumably serve. 

INFORMAL ASPECTS OF ORGANIZATION STRUCTURE 

Although the lines between various positions in the foregoing dia- 
grams are usually single and occasionally double, actual examinations 
of the workings of particular companies will disclose much more com- 
plicated and "extralegal" relationships. For example, on the one hand, 
it is often found that, while two executives may seemingly be on the 
same level in the formal organization chart, one of them may actually 
be held in higher esteem by colleagues and subordinates; or one of 
them may be referred to frequently while the other is avoided or by- 
passed. Again, it is also found that some employee to whom no formal 
grants of authority have been made whatsoever, nonetheless is looked 
upon as the natural leader of a given group. To this person, various 
individuals "declare" their allegiance by their acts, though by the organi- 
zation chart they seemingly report to someone else. And, finally, em- 
ployees in the case of unionized situations turn for help to their stewards, 
who are not in the company organization structure. Yet there exists here 
a definite organizational relationship that, for all practical purposes, is 
often more significant than the relationships shown on the company 
chart. The first two of these nonformal relationships are now discussed, 
and the third is taken up in a later section of this chapter. 

INFORMAL EXECUTIVE AUTHORITY 

Even casual observation is usually sufficient to show that there are 
differences between the formal authority an executive has and that 



58 



PERSONNEL MANAGEMENT 



which he actually possesses. Some executives have high titles but wield 
little power, whereas others of lower status in the organization chart 
exercise authority beyond their assigned station. 

More careful studies disclose such differences even more strikingly. 
Of particular interest here are sociometric studies that seek to show 
graphically various types of working relationships between members of 
an organization. An example of this is shown in Figure 5. The light 

FIGURE 5. Sociometric Analysis of an Organization Structure* 




* From C L. Shartle, "Leadership and Executive Performance," Personnel, March, 1949, p. 6. 
Source: The Ohio Leadership Studies, Personnel Research Board, Ohio State University. 



lines depict the formal lines of relationship between levels of the organ- 
ization structure. The heavy lines show the relationships based upon 
a study of the question with whom most time is spent in getting work 
done. It is clear from the heavy lines running to the positions marked 
"4," "42," and "511" that, because of their respective levels in the 
structure, their significance is greater than that of the other positions. 1 
Although the existence of such differences between actual and as- 
signed authority is beyond dispute, how they develop and change are 

1 It is to be noted that such sociometric measurements are superimposing procedural 
analysis upon structural elements and are not solely making examinations of structural 
importance. 



ORGANIZATION STRUCTURE 59 

topics about which too little is known. Nonetheless, the significance of 
such informal authority relationships cannot be overestimated. To the 
personnel executive who feels that staff position in an organization is 
perhaps inadequate, developing his services so that more and more 
people rely upon his organization is a real possibility along informal 
lines. Or the personnel executive who is wondering why his services 
are not being accepted may make a sociometric study to see if other ex- 
ecutives are being consulted more than he on personnel matters. More- 
over, by knowing who the "real" leaders are in an organization, the per- 
sonnel executive can make sure that he deals with the significant cogs 
and is not wasting his time with just names. 

This might seem cynical on the surface, but it is not. If a system 
operates in a certain way and if there is little chance of changing it, one 
who does not adapt himself to it is naive and unrealistic. Certainly, in 
the field of personnel management some of our failures can be laid to 
the fact that we have idealistically tried to work through formal struc- 
tures alone. Had cognizance been paid to the fact that informal author- 
ity relationships exist, there would have been fewer mistakes — such as 
dealing with the wrong executives, having good plans and policies re- 
jected, obtaining insufficient funds to carry on needed functions, and 
being obstructed in the execution of otherwise good programs. 

Without then seeking to judge whether or not informal structures 
should be allowed to exist, the point made here is simply that they do 
exist and are likely to continue to do so. Hence, in the performance of 
various functions of personnel management, it is essential to try to know 
as much about informal relationships in a group as we seem to know 
about formal relationships. And then such knowledge should be used so 
that the personnel functions, on the one hand, can be performed as ef- 
fectively as possible and, on the other hand, will suffer as few unex- 
pected obstructions as possible. 

INFORMAL EMPLOYEE AUTHORITY 

Wherever groups of people organize, the careful observer will soon 
note that unofficial cliques form among employees. Each clique will 
have a structure of leaders and led as rigid as any put down formally on 
paper. The "appointment" of the leaders in such cliques comes about 
in a number of ways. Some become recognized because they are "born" 
leaders of men; they naturally are accepted because of an aptitude to 
perform leadership functions. Others are accorded leadership status be- 
cause of some institutional factor, for example, seniority, type of work, 
position in a line, pay received, age, or special technical skills. 



60 PERSONNEL MANAGEMENT 

These informal structures, also, are composed of a hierarchy of posi- 
tions of prestige. There is not just one leader, but usually several of 
varying importance or of specialized areas of significance. Thus the 
group may look to a particular employee on matters pertaining to 
wages, to another for advice on how to deal with recalcitrants, and to 
still another when a spokesman is needed to talk to the supervisor. In 
a way, each member of the group is assigned some place that determines 
his status. Thus it is that one observes an employee being "put in his 
place" by a second employee, who feels that the first has not earned the 
right to be heard as yet. And the other employees will support the sec- 
ond, or reject him, depending upon the status of leadership which the 
first has not, or has, attained. 

These hierarchies carry duties as well as privileges. The informal 
leaders are, on the one hand, expected to lead the employees in their 
"assigned" specialties. The "old-timer" is expected to counsel those in 
need of advice. The "spokesman" is expected to present to supervisors 
the thoughts which need to be conveyed in that direction. And the "or- 
ganizer of social gatherings" is looked up to as the arbiter in these 
matters. As noted earlier, it is usual to find several leaders of specialized 
character, although occasionally the various duties are embodied in 
one person. 

On the other hand, varying types and degrees of rights and privileges 
are accorded the natural leaders. Perhaps the most significant is that 
of the esteem in which they are held. Thus they possess a "status" in 
the group of considerable prestige value. Such status not only is recog- 
nized within the working areas but also is often extended into the com- 
munity itself. Consequently, the employee himself, and at times his 
wife and family, are accorded respect that is not the lot of the "average" 
employee. In addition to this social status, it will also be found that the 
natural leaders are considered to be immune from performing menial 
tasks or are permitted various liberties which others are not. 

While these hierarchies are informal, they nonetheless are well fixed 
in the minds of employees. The newcomer in a group, for example, is 
soon made aware of the need for respecting the informal social systems, 
or he is placed outside the pale; and failure to be accepted by a group 
is a penalty that few wish to pay. Indeed, it is felt by some that the 
pressures of the informal social system are much more important than 
the so-called "logical" factors of individual motivation. 

If this be true — and some events in labor-management relations 
seem to indicate that there is merit to the argument — then the student 
of personnel management should give heed to this phase of human re- 



ORGANIZATION STRUCTURE 61 

lations. To begin with, the wisdom of taking such social systems into 
consideration when developing any personnel program is evident. For 
example, in developing a recreational program, the character of existing 
informal patterns of recreational relationships or alignments had better 
be known and taken into account. Moreover, such informal structures 
may be utilized for such purposes as communications, for making sam- 
ple surveys of employee attitudes, and for feeling the pulse of employee 
reactions. To cite one example, the company that stopped an unfounded 
but spreading rumor in its tracks, by getting in touch with a few key 
employees, made use of the informal structure to its own advantage as 
well as that of its employees. 

To sum up, there is in every formal organization, a series of informal 
and unofficial structures. They develop spontaneously, they exist at the 
grass roots, and they certainly cannot be stamped out. One may as well 
be realistic, recognize their existence, and at least do nothing to arouse 
antagonism if one cannot make good use of them, jit is worth under- 
lining again the contention of some that these informal systems are 
perhaps more important than the formal in achieving more effective and 
satisfying labor-management relations. Certainly, this seems true in the 
negative sense, for where companies have run roughshod over the in- 
formal structure, the results have been far from happy. 

J RELATION OF LINE AND STAFF EXECUTIVES 

The basic kinds of organization structure have now been described. 
The predominant use of the line and staff form of structure has been 
noted. It is now pertinent to inquire into the particular roles of line 
executives and of staff executives in personnel matters. This may per- 
haps best be done by examining who has authority over, and who is 
responsible for, personnel work. It is impossible here to establish bound- 
aries of authority and responsibility in every case. All that can be done 
is to note, first, the application of these terms to line and staff executives 
(taken up in this section) and, second, some factors which tend to 
change the boundaries of authority and responsibility in different cases 
(taken up in the next section) . 

AUTHORITY IN ORGANIZATION STRUCTURE 

1. Definition and Source. "Authority," in its broadest sense, 
means the right to command performance of others. It implies the right 
to give orders to others and to expect obedience from those to whom the 
orders are given. These comments give authority a harsh sound, but in 



62 PERSONNEL MANAGEMENT 

actual practice "giving orders" and "expecting obedience" can and 
should be tempered with understanding, personal interest, and common 
rules of courtesy. 

But what is the source of authority, and how far does authority ex- 
tend? In a formal sense, any executive obtains authority by delegation 
from a superior. Hence, the right to command and over whom are deter- 
mined by the wording of the delegation. Thus a personnel director may 
be empowered by the vice-president, first, to organize and operate a 
personnel department and, second, to render personnel services to 
various other groups in the organization. The first part of this delega- 
tion gives him authority over the staff and the workings of his organiza- 
tion unit. The second part of the delegation indicates that his direct 
line of authority stops at the borders of his own department. Beyond 
these limits, his authority is advisory, which, in the final analysis, means 
no authority. 

Those served by the personnel department have direct authority over 
personnel matters. A shop supervisor, for example, has the right to 
accept or reject candidates sent over by the employment section. Or he 
has the right to recommend discharge of employees from his depart- 
ment, to recommend wage increases, to decide whether or not a given 
employee should be disciplined, etc. These rights are, of course, subject 
to the decisions of his own superior and circumscribed by company 
policies and by clauses in the union-management contract. 

2. Earning Authority. In an informal sense, the authority de- 
rived by delegation may be strengthened and the borders of authority 
may be extended by earning the right to lead. Indeed, long-run success 
is dependent perhaps more upon earned leadership than upon delegated 
rights. Herein lies the great opportunity of such staff departments as 
personnel. Although its relation to other departments may be advisory, 
the personnel department can wield great power for good by gaining 
the respect of those it serves. This may be accomplished, first, by being 
technically proficient and, second, by performing services of interest to 
management and labor better than the latter could for themselves. 

When the quality of the services of a personnel department is of 
such a nature as to earn the respect of line executives, its influence and 
status will rise to a high point. It will have so many calls on its services 
that it will never need to worry about prestige, power, or "authority." 
Personnel executives should therefore concern themselves with superior 
service. All else will come to them as a natural result. 

Another aspect of earning authority may be noted by examining the 
contention that the personnel executive should sit in the highest councils 



ORGANIZATION STRUCTURE 63 

of the company. The bald statement implies that high authority should 
be given to this staff specialist. While it is not denied that labor matters 
are of paramount and growing importance in the average concern, it 
is nevertheless true that the importance of a problem does not of itself 
mean that the executive who is supposed to be handling the problem 
deserves authority to handle it. Before such authority is granted, the 
executive should prove his ability to handle important issues. Unfortu- 
nately, in the past, many of the executives who carried high-sounding 
personnel titles did not possess the training, skill, or experience to merit 
large measures of authority. 

RESPONSIBILITY IN ORGANIZATION STRUCTURE 

If an executive in the organization structure has authority, he also has 
responsibilities. Sometimes it seems that the burdens of responsibilities 
outweigh the rights of authority. Why this is so may have various ex- 
planations, but one lies in the nature of responsibility. 

1. Meaning of Responsibility. By "responsibility" is meant, 
first, the obligation to do an assigned task and, second, the obligation 
to someone for the assignment. But what is meant by "obligation," and 
how far does it extend? This implies a willingness to accept, for what- 
ever rewards one may see in the situation, the burden of a given task 
and the risks which attend in the event of failure. Because of the re- 
wards and penalties involved, it is highly essential to specify the limits 
of responsibility. Let us examine briefly the case of the personnel direc- 
tor in this connection. According to the definitions just given, he is re- 
sponsible not only for the work he does but also for the work of his 
subordinates. Assume that in a particular company the personnel di- 
rector holds a staff position, as defined earlier. Assume, further, that one 
of his subordinates helps in selecting a candidate for a job in the factory 
and that, after a month or two, the employee proves to be an inefficient 
worker. Should the personnel department be held responsible? Of 
course, the personnel director may and should take steps to prevent a 
recurrence of similar mistakes in the future. However, since the per- 
sonnel department holds a staff position in this instance and since veto 
powers of hiring were in the hands of the shop department, does the 
blame lie upon the staff department that suggested the hiring or the 
line department that had the final word on hiring? 

2. Defining Responsibility Limits. There is no organiza- 
tional "law" which indicates the one answer to these questions. All that 
can be said about such cases is that responsibility could have been placed 
upon one or the other. The important thing is to be sure to define as 



64 PERSONNEL MANAGEMENT 

explicitly as possible how far each person's responsibilities extend. This 
is not intended primarily for the purpose of "saving the skins" of em- 
ployees, although this is significant to the feeling of fairness and security 
which all of us seek. Of greater importance is the strength which this 
adds to the organization structure by discovering gaps in responsibility 
assignment that need filling, and by providing a definite basis for com- 
paring performance against expected results. In the second place, if a 
formal statement of responsibilities is not made, informal boundary 
lines with uncertain borders will nevertheless be established. Such 
demarcations, since they are not studied, are not likely to be good; and, 
since they are informal, they are bound to encourage "buck passing," 
recrimination, and "witch hunting" when things do go wrong. Hence, 
where formal limits of responsibility are defined, an answer to the ques- 
tion posed in the foregoing paragraph would have been a routine mat- 
ter. 

Since personnel matters are subject to "split" responsibilities, it is 
very important to have clear statements of the obligations of all con- 
cerned with these matters. For what is the personnel department respon- 
sible in hiring, training, wage determinations, promotions, collective 
bargaining, and research? And in these matters, for what are line 
executives responsible? Better to debate these limits at the outset than 
to recriminate and indulge in personalities later. Moreover, when this 
is done, all levels of management and the personnel division as well can 
concentrate on doing their respective jobs. They need not divert their 
energies to preparing excuses and accusations. 

RELATIONS OF AUTHORITY TO RESPONSIBILITY 

Having discussed the terms "authority" and "responsibility" sepa- 
rately, it is now appropriate to note how they may be related. Of par- 
ticular interest here are the following three phases of these terms: first, 
need of unity of authority and responsibility; second, coequality of 
authority and responsibility; and, third, importance of lines of com- 
munication. 

1. Unity of Authority and Responsibility. From what has 
already been said, it should be apparent that each phase of personnel 
work should be clearly assigned to a given individual or organization 
unit. Take training as an example. Training phases, such as program 
development, teaching methods, and training aids may well be assigned 
to a training section in the personnel division. Actual trainers — who 
will use these services and aids — may be assigned to each supervisor. 
Here there is a clear division of authority and responsibility for particu- 



ORGANIZATION STRUCTURE 65 

lar phases of training. Delineation of obligations for all other personnel 
functions should be made in the same manner. 

2. Equality of Authority and Responsibility. One fre- 
quently encounters the statement that authority and responsibility 
should be coequal. This contention holds true, however, only when the 
person on a given job is capable, first, of accepting responsibility and, 
second, of handling authority. Any executive is justified in being re- 
luctant to place authority over personnel in untried or inexperienced 
hands because of the losses occasioned by misused authority. It is usually 
less likely that responsibility will be mishandled. We often see people 
made responsible for something but given little or no authority in con- 
nection therewith. However, as these people "prove" themselves, au- 
thority is gradually increased; it is made coequal with responsibility for 
personnel matters. 

Of course, there are examples of executives who, through fear or 
ignorance, refuse to delegate authority beyond the bare minimums, but 
such individuals have nothing to contribute to the theory of good man- 
agement practice. On the other hand, most executives are willing to 
delegate authority to subordinates as the latter prove themselves, be- 
cause such delegations serve to free the time and energies of the su- 
periors for other matters. 

3. Importance of Lines of Communication. Authority and 
responsibility for a given job may also be related by the lines of com- 
munication which are established between upper and lower levels of the 
organization. To begin with, such a line invariably runs between any 
subordinate and his superior. This is used to assign particular tasks or 
plans and to specify limits of authority and responsibility. 

In addition, there are lines of communication running between the 
subordinates just cited and various technical experts. Through such 
channels, specialized service of various kinds is made available. To 
illustrate, a sales supervisor may be authorized by his superior to add 
salesmen to his unit, but the additions may be selected by the personnel 
department, thus freeing the sales supervisor's time for other duties. 

The lines of responsibility, on the other hand, run upward, though 
they, too, may be several in number. The main line of obligation is, and 
always should be, except in emergency cases as noted earlier, to one's 
immediate superior because this insures single and undivided account- 
ability. Lines of information may be established, however, to various 
staff experts. For example, if a sales supervisor sends a report to his 
superior regarding the number of people who left his unit and their 
reasons for leaving, it would be in order to send a copy of this report 



66 PERSONNEL MANAGEMENT 

to the personnel department. In this way, the results will be examined 
not only by the line executive but also by staff experts. This does not 
mean that the sales supervisor reports to two executives or that his ef- 
forts are being scrutinized with a view to showing him up. Rather, it 
should be understood that the line of single accountability remains in- 
violate and that the added line of communication offers a means of 
gaining expert advice which will provide suggestions on how poor re- 
sults can be prevented and good results attained. 

FACTORS IN SPECIFIC STRUCTURAL DESIGNS 

The discussion thus far has presented the theory and fundamental 
principles of the subject; k is now appropriate to note practical applica- 
tions and what lessons may be learned from actual practices.jJThe place 
in the organization structure that is given to personnel in any particular 
case is determined by a number of factors. Among the more important 

ones are: 

i 

1. Degree to which top management considers personnel factors important 

2. Size of company and location of its offices and plants 

3. Influence of such outside factors as legislation and labor unions 

4. Types of labor or production problems calling for solutions 

Of course, these are more or less interrelated, but, for the sake of sim- 
plicity, the foregoing list will be used as an outline of exposition. 

1. Attitude of Management. The opinion of top management 
toward the importance of personnel is undoubtedly the most compelling 
factor in determining its place in the organization structure. In some 
companies (and this is true of some of the largest) there is no per- 
sonnel department worthy of the name, whereas other companies, 
operating under very similar conditions, have elaborate and high placed 
personnel divisions. The explanation for the difference lies solely in 
top management's recognition of this function. An explanation of the 
reasons why some executives are not convinced of the wisdom of adding 
such a division to their organization structure is beyond the scope of this 
text, but a suggestion or two are in order. 

In some cases, slowness to recognize personnel stems from a com- 
mon tendency of line executives to restrict all staff functions to a min- 
imum. Line executives are prone to believe that their prime responsi- 
bilities are much more important than all others. Moreover, they are 
inclined to have unbounded confidence in the solution of labor prob- 
lems, for example, by sheer intuition. Until they see the losses that flow 



ORGANIZATION STRUCTURE 67 

from their shortsightedness, a personnel department worthy of the name 
is unlikely to be established. 

In other cases, failure of personnel departments to be awarded an 
important place can be ascribed to the inability of those placed in 
charge of personnel functions to convince top management of the im- 
portance of their work. It is an elementary principle of business that 
requests for expenditures should not be authorized unless counterbalanc- 
ing savings or returns can be shown, and such results cannot be shown 
by many who carry the title of personnel manager. 2 Unable to see the 
potentialities of their jobs, they are obviously unable to prove to top 
management that personnel is an important function and that it should 
be awarded a high organizational position. Of course, one may ask why, 
in such instances, top management has appointed low-caliber men to 
these positions; and the source of trouble is found to be in top man- 
agement itself. 

In instances in which top management takes a comprehensive and 
understanding view of the subject, a personnel division approximately 
along the lines of that shown in Figure 6 (p. 68) would be the result. 
It should be noted that this chart is a composite developed from actual 
practice and not just a theoretical conception. 

2. Physical Factors. As suggested earlier, size of company, lo- 
cation of offices and plants, and the importance of labor problems affect 
the specific place which such a division would be given in a particular 
organization. For example, a medium-sized company with one plant 
and no unusual labor problems might get along very well with the 
setup shown in Figure 7. As illustrated there, an employment section 
has been installed in the production division to serve its needs, whereas 
employment functions apparently are performed by the sales manager 
himself. In the case of personnel matters affecting all employees, cen- 
tral units have been established in the accounting department to handle 
social security records and in the treasurer's department to handle pen- 
sion and insurance programs. But as an enterprise grows and all parts 
of an organization require the services of a specialized staff, there is a 
tendency to centralize authority over performance of personnel func- 
tions, as illustrated in Figure 4 (p. 55 ) . A centralized staff department is 
usually preferred because it is more economical and results in the appli- 
cation of uniform plans and programs. 



2 This does not mean that returns must be immediate or measurable in dollars or cents. 
Much that good personnel work accomplishes comes only after years of effort and often 
in terms of intangibles whose value is significant, though not always expressible in mone- 
tary terms. 













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ORGANIZATION STRUCTURE 69 

FIGURE 7. Personnel Functions in a Medium-Sized Company 



PRESIDENT 



PRODUCTION 
MANAGER 



SHOP 
SUPERINTENDENT 










FOREMEN 










WORKERS 





EMPLOYMENT 
DEPARTMENT 



SALES 
MANAGER 



TREASURER 



EMPLOYEE 
INSURANCE 



ACCOUNTANT 



SOCIAL 
SECURITY 
RECORDS 



GENERAL 
ACCOUNTING 



COST 
ACCOUNTING 



When growth of an enterprise takes place by establishing additional 
locations, the question arises as to where and by whom personnel func- 
tions should be performed. One answer is illustrated in Figure 8. A 
personnel department, subject to the plant manager, is established at 



SALES 



FIGURE 8. Decentralization of Personnel Functions 



FINANCE 



PLANT NOT 



PERSONNEL 
DIRECTOR 



-LINE AUTHORITY 



PRESIDENT 



PRODUCTION 



ACCOUNTING 



INDUSTRIAL 
RELATIONS 



PLANT NO- 2 



PLANT NO- 3 



PERSONNEL 
DIRECTOR 



PERSONNEL 
DIRECTOR 



• STAFF AUTHORITY 



each location. In addition, there is a central personnel unit to which 
each may turn for expert advice and from which uniform plans and 
policies are derived. By this arrangement, local autonomy with its ad- 
vantages is secured, yet uniform practices are assured for the company. 
In some instances, the foregoing arrangement is changed by making the 



70 



PERSONNEL MANAGEMENT 



local personnel units responsible to the central personnel unit instead of 
to the respective plant managers. This relationship is used because of 
the more specialized direction which is given to the local personnel 
units. This advantage is attained only at the cost of lowered co-opera- 
tion between the local personnel units and the plants which they serve. 
Another answer to the question of multiple-plant units is to centralize 
the authority and performance of personnel functions, notwithstanding. 
This arrangement, illustrated in Figure 9, is usually unwieldy and 
gives way to some decentralization of performance, if not authority over 
personnel work. 



FIGURE 9. Centralization of Personnel Functions 



PRODUCTION 



PLANT NO-1 



PRESIDENT 



SALES 



FINANCE 



ACCOUNTING 



PERSONNEL 

MANAGER 

PLANT NO-1 



PERSONNEL 

MANAGER 

PLANT NO 2 



PERSONNEL 

MANAGER 

PLANT NO 3 



INDUSTRIAL 
RELATIONS 



CENTRAL 

OFFICE 
PERSONNEL 



Ln 



PLANT NO- 2 



1^1 



PLANT NO 3 



< LINE AUTHORITY 
i STAFF AUTHORITY 



3. Effect of Legislation and Unions upon Structure. 
Such factors as legislation and labor unions have also influenced the 
design of organization structures. For example, the installation of such 
units as safety and unemployment compensation can be ascribed almost 
entirely to legislative regulations or requirements. Also, the rights of 
employees to organize and bargain collectively have resulted in the ad- 
dition of organization relationships as illustrated in Figure 10. 

4. Problems Faced. In the last place, the type of personnel func- 
tions performed depends largely upon the problems to be solved. This 
explains why personnel management usually developed first in the pro- 
duction divisions of most companies. Here, labor problems among large 
aggregations of workers have been encountered. Another excellent 
example of the force of special problems is provided as recently as 
World War II when many companies established personnel units for 
the sole purpose of dealing with the large numbers of women workers 



ORGANIZATION STRUCTURE 



71 



who were entering industry's ranks for the first time. Additional proof 
of the tendency to create personnel units to handle particular problems 
is illustrated in Figure 11 (p. 72) . This shows the existence of units to 
take care of such war-created activities as fingerprinting, rationing and 
transportation services, and night-shift counseling. 

FIGURE 10. Structure of Collective Bargaining 

UNION COMPANY 



UNION PRESIDENT 
1 



FACTORY COMMITTEE 
1 



DIVISIONAL COMMITTEE 
1 



DEPARTMENTAL COMMITTEE 
1 




COMPANY PRESIDENT 



GENERAL SUPERINTENDENT 



GENERAL FOREMEN 
1 



DEPARTMENT FOREMAN 
1 



UNIT COMMITTEE 






SHIFT FOREMAN 


**-. 




T 


T 



COMMITTEEMAN 
♦ 



GROUP LEADER 



EMPLOYEE 



►LINES OF DIRECT CONTACT 



►LINES OF INFORMATION 



TESTS OF GOOD STRUCTURE 

The foregoing discussion of the theory and practice of organization 
structure has been undertaken with a view to providing the student 
with a background of material essential to an understanding of the place 
of personnel management in an enterprise. In conclusion, it is worth 
pointing some remarks toward the matter of tests by which it may be 
possible to determine whether or not a given personnel department is 
well organized. In general, a good personnel department should pos- 
sess the following characteristics: 



72 



PERSONNEL MANAGEMENT 



1. Stability, or the ability to replace key personnel executives or employees 
with a minimum loss of effectiveness 

2. Flexibility, or the capacity to handle effectively short-run changes in the 
volume of personnel work or in the personnel problems encountered 

3. Growth, or the feature of being prepared with advance plans to handle 
permanent changes in personnel problems or in underlying labor con- 
ditions 

4. Balance, or the feature of having authority and resources adequate in 
amount to handle the functions and problems for which the personnel 
department is made responsible 

5. Simplicity, or the feature of keeping personnel lines of relationship to 
other departments clear and simple 

6. Objectivity, or the feature of having definite objectives for each unit in 
the personnel department 



FIGURE 11. A Personnel Department 



MERITS - 
EVALUATION DEPT 



DIRECTOR OF 
INDUSTRIAL RELATIONS 



TRAINING AND 
UPGRADING 



PERSONNEL DIRECTOR 




TRANSFERS AND 
UPGRADING 



COUNSELING 



DAY | NIGHT 



INTERVIEWS 


FINGER- 
PRINTS 



TESTING- 
SCORING 



WRITE-UPS 



QUESTIONS AND PROBLEMS 

1. What answers can be given to the question of the kind and amount of 
authority and responsibility that may be accorded to the personnel man- 
ager? Which answer do you consider to be most nearly correct? 

2. Why is a limited use of the functional form of organization structure desir- 
able during periods of emergency? Illustrate this in connection with the 



ORGANIZATION STRUCTURE 73 

conditions that exist during wartime or when much legislation is being 
enacted. Use personnel situations in your illustrations. 

3. Essentially how much authority does a staff executive, such as the personnel 
manager, have in a pure line and staff structure? Where and how does he 
ever build any influence over personnel matters? 

4. What must be done to keep the channels of line command and staff advice 
from running afoul of each other? 

5. What are the sources from which authority may be derived? What moral 
is there here for the personnel manager? 

6. In the course of selecting a given employee, some differences of opinion 
arose between the personnel department, the factory superintendent, and 
the legal department. The trouble came to a head when a foreman refused 
to accept a candidate sent to him by the personnel department. The latter 
attempted to force the factory superintendent to make the foreman take 
the man in question. The personnel department brought in the company 
lawyer, who said that the selection of the personnel department had to be 
followed because it (the legal department) had decided that, unless the 
candidate in question were hired, the company would be subject to a law- 
suit for having failed to take on a man that the personnel department had 
hired. 

a) What kind of authority did each of these departments think it had? 

b) What authority should each have? 

c) Is the legal department right? 

7. Of two executives on the same plane organizationally, it was found that, 
during a given period of time, one was contacted by subordinates and 
other executives on an average of thirty times a day, and the other, five. 
What are the possible explanations? 

8. Is it desirable or undesirable to encourage each executive to develop his 
informal powers as much as he can? Explain. 

9. What is the moral of informal authority for the personnel manager himself? 

10. If employees appoint informal leaders among themselves, why doesn't 
industry seek out these leaders and put them on the management team? 

11. Why not suppress informal organizations among employees and require 
all relationships to conform to the formal chart of organization structure? 
Explain. 

12. In what ways may the informal organization be used by the company? 

13. Can you cite any actual examples of how employees use the informal struc- 
ture among themselves? If you cannot from your own experience, ask some 
"old-timer" about this subject, but don't use the term "informal structure" 
when talking to him. 

14. Upon what factors does the place accorded the personnel department in a 
company organization structure usually depend? Illustrate by concrete 
examples. 

15. Why has top management been more prone in recent years to give greater 
recognition to personnel departments? 



74 PERSONNEL MANAGEMENT 

16. What is meant by "centralization" of personnel functions? Distinguish be- 
tween the aspects of authority and performance as related to centralization. 
Illustrate how one may be centralized and the other decentralized. 

17. As communication facilities are improved what would you expect to happen 
in the case of centralizing personnel work? What factors tend to centralize, 
and what factors to decentralize, personnel work? 

18. In future years, would you expect personnel departments to increase or 
decrease in importance? Why? 

19- How would you determine whether or not a given personnel department 
had been accorded sufficient resources and authority to carry on its assigned 
tasks effectively? 

20. During a conference between the plant manager, the personnel manager, 
and the chief shop steward (union representative) of a given company 
in regard to a proposed pension plan, a number of disagreements became 
apparent. The plant manager stated that pension plans did no good so 
far as younger employees were concerned; the personnel manager stated 
that he was going to have one put in regardless; and the chief steward 
insisted that the benefit payments as stated in the proposal be doubled. Dis- 
cuss this case from the viewpoint of organizational and managerial princi- 
ples. 



CHAPTER 



5 



Job Requirements 



THE HIRING FUNCTION 

In the preceding chapters, broad background and managerial aspects of 
personnel were studied. It is now pertinent to turn attention to the 
operative functions of personnel management. These, as will be re- 
called, are concerned with procuring, developing, maintaining, and 
utilizing a labor force. Each of these involves detailed activity, specific 
methodology, and careful application of principles. As a consequence, 
it will be necessary to devote the next several chapters to a discussion of 
the first of these; the others will be studied in subsequent chapters. 

It is worth repeating the statement made earlier, however, that all 
functions of personnel are interaffecting. While procurement, for exam- 
ple, is taken up now as a separate function, it affects and is affected by 
such other operative personnel functions as training, wage determina- 
tion, and collective bargaining. But to keep the textbook within prac- 
tical limits, it is not feasible to show these interactions in each chapter. 

"Personnel procurement" may be defined simply as the task of hiring 
labor to fill current or future job vacancies. This simple statement hides 
a number of important questions that must be answered if the task of 
hiring is to result in successful placements. Among these questions are 
the following: 

1. What are the requirements and the content of jobs to be filled? 

2. What kinds of and how much labor must be procured? 

3. From what sources may the required labor be procured? 

4. What procedures should be adopted in order to screen desirable from 
undesirable candidates? 

5. What is the use of such tools as interviewing and testing in the selection 
procedure? 

6. What is the place of transfers and promotions in the procurement func- 
tion? 

The present chapter is devoted to the first of these questions; the other 
questions are considered in the next several chapters. 

75 



76 PERSONNEL MANAGEMENT 



DEFINITIONS 



The terms used in connection with job studies are several in number 
and differ in connotation; therefore, it is desirable at the outset to have 
some agreement on usage and definitions. It is well to point out that 
the definitions suggested here are not universally adopted. Unfortu- 
nately, common usage of terms does not exist. Hence, when terms are 
encountered in other sources or actual cases, it is well to ascertain what 
meaning is given in each instance. In this section on definitions, the 
material is taken up under the following headings: 

1. Meaning of job requirements 

2. Terminology of job studies 

3. Definition of job terms 

1. Meaning of Job Requirements. One of the easiest mistakes 
to make about jobs is to assume that what a job is or requires is readily 
understood. For example, if one were asked what a stenographer does, 
the answer most likely to be given is that she takes dictation, transcribes 
the "shorthand," and types. This obvious answer really reveals very 
little about the job so far as filling a vacancy is concerned. How fast, for 
example, must the stenographer be able to take dictation or type? And 
what about a candidate who is not now a stenographer but who would 
like to become one? 

These two questions point up the need for specifications of job re- 
quirements that are defined in terms of the experience that a company 
will require of candidates. On the one hand, the policy may be that of 
hiring experienced labor. In that case, job requirements can be usefully 
stated in what activities are performed on each job. A listing of typical 
duties of a typist's job, of sales duties of a salesman, or of the work 
activities of a production machinist would suffice. In each case, a can- 
didate's work experience could be checked against the stated require- 
ments. 

On the other hand, it is often necessary to hire inexperienced and 
untrained persons. Then a statement of job requirements in terms of 
duties is of little help. Assume, for example, that the specification for 
a vacancy on a drill press job stated that the operator drills holes in 
various classes of metal. Such a statement would be of little service 
in determining whether or not an inexperienced candidate possessed 
the potential qualities to become a good drill press operator. 

Job requirements, in such instances, must be translated from phys- 



JOB REQUIREMENTS 77 

ical or mechanical terms to those of human characteristics. Thus, in 
the case of the drill press operation, such specifications as the following 
would have to be derived: 

1. Finger dexterity requirements 

2. Physical strength components 

3. Hand-eye co-ordination requirements 

4. Spatial relationship requirements 

Then, as candidates presented themselves, their potential ability to fill 
vacancies could better be measured in terms of these basic requirements. 

What a job requires may be described either in terms of what duties 
are performed on the job or of what characteristics are required to per- 
form the duties. Invariably the first of these descriptions must be pro- 
vided before the latter can be derived. Although the personal charac- 
teristics are more fundamental and, therefore, of more lasting value, 
many companies provide only the first type of job specifications. 

2. Terminology of Job Studies. A "job specification," pure 
and simple, is a written description of a job and its characteristics. Or- 
dinarily, however, job specifications are also used to cover the abilities 
and qualities that an individual should possess in order to hold the job 
in question. The latter is perhaps better described as a "man specifi- 
cation," although commonly it is included in the job specification. 1 

While on the subject of definitions, it is well to anticipate a few 
other terms. "Job analysis," by which specifications are obtained, re- 
fers to the process of studying the operations, duties, and organizational 
aspects of jobs. From such analyses, more or less general statements 
about jobs are obtained, which are known as "job descriptions." After 
the descriptions are further refined, specifications are derived. Another 
term of interest is "job classification," which refers to a system of re- 
lating jobs with similar or family characteristics into a logical order 
of groupings. The term "job evaluation," which subject is studied in a 
later chapter, has reference to a plan of monetary measurement of job 
values. 

It is well to note here that, although interest in these tools at present 
is in relation to hiring, they are also of use in connection with other 
personnel tasks. For example, training, counseling, safety work, job 
evaluation, promotion plans, and personnel research are scarcely pos- 
sible without a good plan of job analysis, descriptions, classifications, 

1 "Man specifications" are discussed more fully in the next chapter. 



78 PERSONNEL MANAGEMENT 

and specifications. Their use in connection with such functions is dis- 
cussed in later chapters. 

3. Definition of Job Terms. To avoid confusion of terms used 
in connection with work assignments, attention to definitions of jobs, 
positions, and occupations is in order. By a "job" is commonly meant 
an assignment of work calling for a set of duties, responsibilities, and 
conditions that are different from those of other work assignments. The 
foregoing elements determine job limits and not the tools, records, or 
location of a particular task. For example, two salesclerks who are 
performing work that involves similar duties and requires like train- 
ing, experience, and personal characteristics would, according to the 
foregoing definition, be said to hold the same kind of job. Yet these 
two clerks may be working in widely separated stations in the store. 
On the other hand, two other salesclerks who do not have the same 
range of duties would be said to be working on different jobs even 
though they happened to be located side by side. 

The term "job" may be clarified further by comparing it with "po- 
sition" and "occupation." The term "position" is sometimes used as 
a synonym for "job," although in better practice a distinction is made 
between the two. Thus, when several persons are doing similar work, 
each one is said to have the same job, but different positions. The latter 
term is restricted to mean the tasks performed by a person without 
indicating whether or not the work differs from that of work assign- 
ments of other individuals. The term "stations" is somewhat similar in 
meaning to that of "positions." There invariably are more positions or 
stations in a company than jobs. 

The term "occupation" refers to a group of jobs with common char- 
acteristics. Although selling, for example, may be divisible into a num- 
ber of jobs, depending upon what is being sold, a group of closely re- 
lated selling jobs may be considered as an occupation. "Job families" 
is another term used to cover the idea of groupings of similar jobs. 

Within a particular job, two or more "grades" may also be recog- 
nized. Such a distinction is desirable when the work assignments on a 
given job can be graded according to difficulty or quality of workman- 
ship. For example, a wide range of work may be performed in the 
case of a single-spindle drill press operation. Some of the work might 
involve intricate drilling, and other batches might be more or less sim- 
ple. Hence it would be desirable to distinguish between operators on 
this machine according to whether they were, let us say, Class I, Class 
II, or Class III operators, meaning that they were highly skilled, semi- 
skilled, and learners, respectively. 



JOB REQUIREMENTS 79 



A PROGRAM OF SPECIFYING JOB REQUIREMENTS 

Since labor is hired to carry out specific jobs, it would seem axio- 
matic that knowledge of work assignments is a basic prerequisite for 
performing the procurement function. This information may be gath- 
ered either after vacancies occur or in expectancy of vacancies. Under 
the former practice, the job of hiring is delayed somewhat as compared 
to the practice of gathering job data before vacancies actually occur. 
A survey of practice in this respect would undoubtedly show that the 
former is more commonly followed, although there seems to be an in- 
creased tendency to prepare job data in advance of need. It must be 
noted, however, that specifications of job content are not nearly so 
common — to go into another aspect of industry — as are material specifi- 
cations. Perhaps the difficulty in prescribing job content and personal 
qualifications (this is to be taken up in the next chapter) seems to ex- 
plain why specifications, at least any worthy of the name, are not very 
common. 

When hiring is performed by line executives themselves, job specifi- 
cations are of questionable value. However, when turnover of such 
executives is high, use of specifications is recommended because job 
information will not vanish when line executives are transferred, pro- 
moted, or leave the company. The use of job specifications is particu- 
larly desirable when a personnel department is assigned the task of 
hiring. In such cases, the efforts of the expert in procurement will be 
more effective if he possesses an accurate statement of the need to be 
filled. And as an organization grows, such information becomes indis- 
pensable. 

The task of developing such information may be conveniently dis- 
cussed under the following headings: 

1. Information to be gathered 

2. Responsibility for collecting information 

3. Methods of gathering information 

4. Writing up the job descriptions 

INFORMATION TO BE GATHERED 

The first step in a well-rounded program of job specifications is to 
prepare a list of all jobs in the company and where they are located. 
Too frequently, a well-devised and meaningful system of job titles does 
not exist. In addition, job titles are often too general to be distinctive. 
Frequently, similar jobs are called by different names or different jobs 



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82 PERSONNEL MANAGEMENT 

by the same names. Such undesirable conditions can be cleared up 
quickly by the use of job lists and title descriptions. 

The preparation of job titles is a step in the process known as "job 
analysis," which will be discussed more fully later in this chapter. It 
may be noted here, however, that information on job titles is best de- 
rived by using a number of sources in order to obtain a cross-check. 
These sources include, first, payroll records; second, organization chart 
titles; third, reports from supervisors, foremen, and managers; fourth, 
interviews with or questionnaires from employees; and, fifth, the Dic- 
tionary of Occupational Titles. The latter is a publication of the fed- 
eral government which serves as an excellent source of information 
and as a basis of industry-wide comparison. The result of such studies 
will be a list such as that illustrated in Figure 12 (pp. 80 and 81 ) . This 
shows the job titles, where jobs are located, and miscellaneous informa- 
tion about the various jobs. 

Such lists of jobs and job titles are, of course, merely a start, al- 
though an indispensable beginning, in the process of gathering informa- 
tion for use in the procurement function. The next step is to gather de- 
tailed information about each job. To what extent we should go in 
gathering information of this character depends upon the various other 
purposes — training, compensation, organization development, etc. — to 
which job data will be put. In general, however, the information sought 
usually includes the following: 

1. Identifying terms and locations of job 

2. Duties performed 

3. Responsibilities involved 

4. Conditions and factors of work 

5. Personal characteristics and traits apparently required to — 

a) Fulfill the foregoing duties and responsibilities, and 

b) Work under particular conditions and with factors specified 

More specifically the following information would be sought for 
each job: 

1. Job titles, including trade nicknames 

2. Number of employees on the job and their organizational location 

3. Names of immediate supervisors 

4. Materials, tools, and equipment used or worked with 

5. Work or instructions received from and to whom delivered 

6. Salary or wage levels and hours of work 

7. Conditions of work 

8. Complete listing of duties, separated according to daily, weekly, monthly, 
and casual, and estimated according to time spent on each 

9- Educational and experience requirements 



JOB REQUIREMENTS 83 

10. Skills, aptitudes, and abilities required 

11. Promotional and transfer lines from and to the job 

12. Miscellaneous information and comments 

Examples of such information are shown in Figures 13 and 14 (pp. 
84-88 ) . The latter example illustrates how the information was gath- 
ered by means of the questionnaires in the retail field; and the former 
shows a simple, yet reasonably clear, description of a band saw operator 
in the production field. These examples merit close study because they 
illustrate the form in which information may be gathered, the classes of 
information that are prepared, and the manner in which job information 
is written up. 

Job information is particularly useful in connection with the selec- 
tion and placement of special groups of workers. For example, disabled 
or otherwise handicapped war veterans may not be able to do general- 
run factory or office work, but they are capable of holding jobs suc- 
cessfully that require only a part of a person's physical capacities or 
attention. Hence, it is desirable to gather job data with a view to 
learning exactly what the requirements of each job are. The capabilities 
of the individual can then be compared with the requirements of jobs 
until a match is found. How this may be done is illustrated in the next 
chapter in Figures 17, 18, and 19. Another example of this sort is found 
in the case of women workers, who also are limited in the types of jobs 
which they can effectively, and sometimes legally, hold. Here, too, it is 
necessary to study all jobs in order to determine which can be filled with 
female employees. 

RESPONSIBILITY FOR COLLECTING INFORMATION 

Having described the kinds of job information that are useful, it is 
now appropriate to consider by whom such information is collected, 
how it is collected, and in what form it is presented. These matters fall 
within the province of a program of job analysis which may be de- 
fined as: A study of jobs to determine what duties are performed, what 
responsibilities and organizational relationships are involved, and what 
human traits and characteristics are apparently required. In addition to 
the pertinence of such information to the function of personnel procure- 
ment of interest at the present moment, it is also useful in connection 
with topics of interest later in this text, such as employee placement, 
training, and collective bargaining. 

1. Organization Structure of Job Analysis. At a very early 
stage in establishing a job analysis program, its place in the organization 
structure of the company must be determined. Sponsorship of such 



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86 PERSONNEL MANAGEMENT 

FIGURE 14* 

QUESTIONNAIRE FOR JOB ANALYSIS 

Your Name Jane White Dote 2-9-44 



Title or Designation 


of Your Job 


Inspector 


■wrapper 




Regular or Extra 


Regulor 








Your Department 


Coot ond G< 


Dwn Room 






To Whom Do You Report Directly (Name 


and Title): 


Miss Nancy 


Brown 


floor supervisor. 





The purpose of this questionnaire is to ask each person here to write down 
exactly what his or her job is and also to write down the duties and the responsi- 
bilities of that job. This information will be of great assistance in carrying out the 
store's employment, training, and promotion program. 

In the space below, please write a brief description of your work under the 
eight main headings indicated. To do this successfully, reflect for a few minutes on 
your activities, making a few notes of the things you do daily, periodically, and 
occasionally; any supervision of others which you may do; your contacts with 
other individuals and departments; any business contacts outside the Company, 
and whether personally, by telephone, or by correspondence; finally a notation of 
the equipment and material you use. Endeavor to put the essential things first and 
in order of their performance, then the lesser items. 

Next, write four or five sentences covering that portion of your work falling 
under each of the headings. Do any revising necessary to make the statements 
more concise. Whenever possible, begin each statement with word denoting 
action. For example: "open mail, type forms," etc. (Omit "I"). Finally, copy this 
below in legible print or longhand (on typewriter if convenient). 

Use additional paper if necessary and attach securely. 

1 . Description of Work 

A — DAILY DUTIES: Describe in detail the work you perform regularly each 
day. In case of selling, include the lines of merchandise sold and the 
price range. Where there are several steps involved in your job, show 
each separately and in order of performance. 



* Jucius, Maynard, and Shartle, Job Analysis for Retail Stores, Bureau of Business 
Research, Ohio State University, pp. 15-17. 



JOB REQUIREMENTS 87 

FIGURE 14.— Continued 

1. Check and put away supplies received from supply department. 

2. Straighten and clean wrapping desk including washing paste jar, filling 
tape machine with water and tape. 

3. Complete wrapping of after-four merchandise. 

4. Receive sales check and merchandise from salesperson to be wrapped 
for takewith or delivery giving precedence to takewiths. 

5. Open tube carriers for authorized saleschecks and check same against 
merchandise, noting quantity, price and condition of merchandise. 

6. If salescheck is unauthorized, notify section manager. If there is change 
to be returned to customer, count and call sales-person. 

7. Select correct size box, line with tissue, fold merchandise and prepare 
box for takewith or delivery, according to routines learned in training 
period. 

8. Paste customer's address docket on packages and pin triplicate of sales- 
check on packages to be delivered in town or out of town and make 
record of shipments. 

9. Bag layaways, fold sales chack and place in slot of layaway tag and 
place on hook of the hanger. 

10. Keep stubs for stock record purposes. 

1 1 . Answer phone calls for section managers and salespeople. 

12. Check supplies and make requisition for needed items. 

13. Count dockets of merchandise wrapped the previous day. 

14. Make out desk report if there is more than one person in the desk. 

B — PERIODICAL DUTIES: Describe in detail the work you perform regularly at 
stated periods, as, for instance, each week, each month, etc. If none, so 
state. 

None. 

C — OCCASIONAL DUTIES: Describe those duties you are called upon to 
perform at irregular intervals, that is, duties which are special or fill-in 
work. 

None. 



Job Knowledge Requirements 

A— STORE PROCEDURE AND METHODS: 
1 . Handling of sales transactions and authorizations according to store pro- 



cedure. 


2. 


Handling of wrapping according to store procedure. 


3. 


Handling of inspector-wrapper reports according to store procedure. 


4. 


Handling of delivery record of coat department. 


5. 


Type and quantity of supplies needed. 



88 PERSONNEL MANAGEMENT 

FIGURE U.-Conf/nued 

B— MERCHANDISE: 
1. Check mechandise for defects. 



3. What Equipment Do You Use? 

Inspector stomp, tope machine, paste bottle, scissors. 

4. What Materials Do You Work with or Sell? 

Wrapping paper, tissue paper, boxes, tape, twine and miscellaneous forms. 

5. If You Supervise the Work of Others, State How Many and What Their 
Jobs Are (for example: Two file clerks). 

None. 

<6. What Persons in Other Jobs Do You Contact Regularly in Your Work? 

A— WITHIN THE COMPANY 
Section manager Assistant buyer 

Salesperson Floor supervisor 

Buyer Head supervisor 

B— OUTSIDE OF THE COMPANY 

Answer customers' phone calls to salespeople and questions of customers of 

desk. 

7. To What Job Would You Normally Expect to Be Promoted? 

Stock record clerk, Credit Department clerk, Adjustment office clerk, Shopping 
Service, Salesperson. 

8. From What Job Were You Transferred to Your Present Job? 

Hired for job — no previous retail experience. 

programs, particularly in the initiating stages or when they are to be 
used for job evaluation purposes, should be by the top executives. When 
a major committee is established with the president or senior vice- 
president as chairman, it has been found that the "doubting Thomases," 
who are found in every organization, are more readily convinced that 
top management is really "sold" on the permanent value of the evalua- 
tion program. The committee would not carry out the job analysis work; 
but, in addition to the needed prestige it lends in the initial stages, it 
can periodically review the progress which has been made and lend its 
judgment to major problems that invariably will present themselves. 
As to the specific unit that should make the job studies, there is 
some difference of opinion, although the majority of companies assign 
this task to the personnel division. Before personnel departments were 
as common as at present, this work — if done at all — was assigned to an 



JOB REQUIREMENTS 89 

operating executive, who then appointed staff specialists to handle the 
routine details. Since most firms now have personnel units, job analysis 
is often assigned to them. This is logical because personnel is commonly 
responsible for selection, training, and salary administration — all of 
which are helped by job analysis. In many instances, job analysis is 
assigned to the time study or engineering departments because of the 
interest of these units in the physical aspects of the jobs. 

2. Staffing the Job Analysis Unit. Coming to questions of 
how the unit that is to carry on the job analysis is to be staffed, two 
alternatives are available. Either trained help may be brought in from 
the outside, or members on the staff who seem to have abilities along 
these lines may be given special training in job analysis methods. The 
advantage of the former choice is that competent specialists are secured 
at once, but its disadvantage is that outsiders must learn the "person- 
ality" of the company and its special problems. The latter choice re- 
verses the advantages and disadvantages. Most companies, however, 
select job analysts from their own ranks because it seems easier to train 
such specialists than to find them in the labor market. 

Whichever choice is made in staffing the job analysis unit, a certain 
amount of preliminary training is called for, notwithstanding. For one 
thing, analysts must be trained in company policies and organization, 
or in job analysis techniques, depending upon whether they were se- 
lected from the outside or inside. They will also have to be trained on 
ways and means of co-operating with line personnel. It is particularly 
important to impress upon analysts the service nature of their work. 
Unless the co-operation of divisional managers, foremen, and super- 
visors is obtained, job analysts may do more harm than good to a per- 
sonnel program. Of course, line personnel should be called together, 
also, for informative conferences regarding the purposes, methods, and 
expected results of job analysis. This is essential, in order, first, to con- 
vince line personnel that the purpose of the program is helpful to them 
and, second, to break down their natural reluctance to permit "anyone 
from personnel" to mix in their affairs. Moreover, when unions are in- 
volved, it may be desirable to consult with union representatives re- 
garding the nature and purposes of such job studies. 

METHODS OF GATHERING DATA 

Information for job studies is obtained in either of two ways — 
questionnaires or personal interviews. 

In the questionnaire method, a standard form is prepared by the job 
analysts and sent either to each worker or to the supervisors. Some 



90 PERSONNEL MANAGEMENT 

companies prefer to gather job data from the workers, believing that 
they obtain more detailed information thereby, whereas others feel that 
the supervisor is a better judge of what should be included for each job. 
After the completed questionnaires are returned, the job analysts group 
them by jobs and then examine the findings, job by job. As may be 
expected, it is possible to survey all the jobs and positions in a company 
much more quickly by this method than by the interviewing method. 

Under the interview method, the job analyst obtains information by 
personal conference with the workers or supervisors, and sometimes 
both. If he is well trained for his work, the job analyst can gather 
more relevant information by interviewing than is possible with ques- 
tionnaires. Moreover, he carries away with him a personal impression 
of the job, which contributes greatly to the accuracy of the studies. 
Usually, personal interviews are more costly and time-consuming than 
questionnaires. Which should be used depends upon the value received 
and required as compared to the costs and time involved. 

Whichever method of gathering information is used, a few words of 
warning are in order. The job analyst should know how to work with 
supervisors and employees to maintain smooth and understanding re- 
lationships. In order to help analysts maintain such relationships, ana- 
lysts are sometimes supplied with written instructions such as the fol- 
lowing example: 

A. Procedure to be followed during the initial interview and discussion with 
Section Manager 

1. Analyst must adjust the technique of the interview to the Section 
Manager with whom working. If necessary he must be prepared to 
give an explanation of the program. 

a) Go over Selling Supervisor's list of job titles. 

b) Examine and discuss work sheet of sections' job titles, individual 
job responsibilities and duties, and organization structure. Make 
rough organizational chart. 

c) Be familiar with various job descriptions in order to refer to spe- 
cific details immediately. 

d) Correct any faults discovered by making additions to the informa- 
tion on hand, or leave blanks for new descriptions. If the latter is 
necessary, make a definite date to pick up new descriptions. 

2. Results to be achieved from the initial discussion with Section Man- 
ager and Divisional Service Manager — 

a) Complete and accurate job descriptions of all jobs in section. 

b) Correct definitions of all job responsibilities, job duties, and 
organizational lines. 

It is also essential to continue to caution whoever gathers job in- 
formation that the analysis is concerned with jobs and not with par- 



JOB REQUIREMENTS 91 

ticular employees now holding them. There is danger, otherwise, that 
resulting job descriptions will be colored by the personality or special 
skill exhibited by a given employee. Hence, when several employees are 
performing the same type of work, it is good practice to make analyses 
of two or three employees, in order to have comparative information 
that will serve to minimize the danger of personal bias. 

On the other hand, jobs that seem to be identical on the surface 
should not be accepted as such without at least routine checks. For ex- 
ample, it would be a serious mistake to conclude that all floor sales per- 
sonnel in a department store perform the same kind of work and call 
for the same grades of skills. Hence, in making job analyses by this 
method, it is safer to err on the side of too many than too few job 
studies. Should the results then indicate that some jobs considered to 
be different were actually similar, it is easy to cut down on the super- 
fluous studies. Furthermore, by following the practice of making suffi- 
cient job studies, there is less danger of overlooking important details 
that have been incorporated in some jobs but not in others, particularly 
when innovations in procedures are introduced. 

WRITING THE JOB DESCRIPTION 

After the questionnaires or work sheets and other items of specific 
information have been checked over, tentative job descriptions should 
be written. The tentative statements must be submitted to various in- 
terested executives for review, change, and final approval. After this 
is done, the accepted descriptions are prepared. These statements are 
intended to provide in usable and well-thought-out fashion a clear and 
concise summary of the information collected by the job analyses. The 
job descriptions are catalogued by an appropriate system of symbols, 
permitting ready reference to field descriptions and better office control 
over job studies in process as well as those completed. 

In writing job descriptions, a number of requirements must be met 
in their preparation. On the one hand, there are "language" problems 
that must be avoided. It must be remembered that the written word, 
unless carefully chosen, will not convey to the reader what the writer 
intended. Trade terms are particularly elusive and often colloquial; 
hence, when used, they should be defined in nontechnical terms if pos- 
sible. Along similar lines, words should be used in the same sense and 
not with a changing connotation. On the other hand, it is essential to 
avoid overestimating the requirements of jobs. The job descriptions 
should define the minimum acceptable standards for employment and 
performance on the job. Exceptional functions, only occasionally per- 



92 PERSONNEL MANAGEMENT 

FIGURE 15. Job Analysis Schedule* 



1. Job Title POLISHER 2. Schedule No. 

3. Number Employed 30 (25-60) 

6. Title of Verified Job 

8. Alternate Titles JEWELRY POLISHER 



(see VIII) 



10. Dictionary Title BUFFER I 



11. Code 6-77.020 



13. Analysis Prepared by J. O. B. Analyzer 



4. 


Establishment No. 


5. 


Date November 17, 1946 


Number of Pages 6 


7. 


Industry Jewelry 


9. 


Branch Costume 


12. 


Department Polishing 


14. 


Field Office Watucca 



15. JOB SUMMARY 



Holds pieces of costume jewelry and manipulates them against the surface of 
lamwated muslin, flannel, and wire polishing wheels which are power-rotated, 
to produce polished surfaces of various types on them before they are plated 
and painted. 

MINIMUM QUALIFICATIONS FOR EMPLOYMENT 



6. Sex M Age 18 to 60 



17. Necessary Physical Requirements (including height and weight): Strong, 
dextrous hands to hold small objects while they are polished. 

18. Education: S R W English: Other: 

19. Experience: 6 months in the same job, served within the past five years. 
(See VIII). 

20. RELATION TO OTHER JOBS 

May be promoted from WASH BOY; JIGGER (See VIII). 
May be promoted to FOREMAN (Polishing Room). 

21. Supervision Received: General Medium X Close By (Title) 
FOREMAN (Polishing Room) 

22. Supervision Given: None X No. Supervised Titles 

23. Seasonality: Industry Peak-. August to December. Trough: May to July 

Job: Same as Industry 

Supplementary sheets should include the following items: I. WORK PERFORMED; II. EQUIPMENT; 
III. MATERIAL; IV. SURROUNDINGS; V. HAZARDS; VI. SPECIAL INFORMATION; VII. DEFINI- 
TION OF TERMS; VIII. COMMENTS. 



For instructions regarding how each of these items is to be compiled, see Appendix A. 



JOB REQUIREMENTS 



93 



FIGURE 15.-Confinued 



Supplementary Sheet 

Schedule Number 



Date 



11/17/46 



Sheet 2 of 6 Sheets 



Job Title 



POLISHER 



I. WORK PERFORMED 

Note: The polishing work done here falls into six 
groups: (1) oiling (2) gloss (3) cut and gloss (4) mot (5) 
saf/'n (6) c/ean whee/. By using different polishing wheels 
and polishing compounds varied results are obtained. Each 
POLISHER is expected to and at times does perform all of 
the six polishing operations but the POLISHING FOREMAN 
confines them as much as possible to one of the groups. 
The work in each case is essentially the same and is cov- 
ered by the following description. 

1. Prepares for polishing: Mounts a polishing wheel on 
the horizontal arbor of a Polishing Lathe and locks it 
in position with a washer and a nut; dresses the wheel 
to make its sections even and somewhat softer by start- 
ing the Lathe and holding a small hand roke and then 
an emery stone against the rapidly revolving wheel; 
holds a stick of compound against the wheel to make it 
more abrasive and smooths this off by holding a pad 
(usually a used wheel) against it to remove excess; re- 
peats the dressing operation whenever the wheel 
wears unevenly; applies compound frequently. 

Strong hands are required to dress the wheel 
and knowledge, gained through experience, is 
required to recognize when the wheel is satis- 
factorily dressed. 

2. Polishes metal jewelry: Receives trays of jewelry from 
the POLISHING FOREMAN with oral instructions re- 
garding the surfaces to be polished; holds a piece of 
jewelry against the rotating polishing wheel by hand, 
with pliers, or with the aid of a hook; develops a pol- 
ishing routine for the job and follows it for each piece, 
skillfully turning and shifting the piece to produce an 
evenly polished surface; makes a rapid visual inspec- 
tion and, finding the finish satisfactory, lays the piece 
in the tray, using layers of paper to prevent scratching 
the pieces; carries the tray of completed work to the 
PAY ROLL CLERK. 



Per Cent 
of Time 



10 



85 



Degree 
of Skill 



94 



PERSONNEL MANAGEMENT 

FIGURE -\5.-Contmued 



Supplementary Sheet 

Schedule Number 



Date 



7 7/77/46 



Sheet 3 of 6 Sheets 



Job Title 



POLISHER 



I. WORK PERFORMED (Continued) 

Strong and dextrous fingers, hands and arms 
and well-coordinated use of hands are required 
to hold the pieces of jewelry against the wheel; 
good vision is necessary to recognize spots re- 
quiring further polishing. 

3. Makes simple forms from wood and nails to facilitate 
holding particular pieces of jewelry while polishing, 
using hammer, saw, and knife. 

II. EQUIPMENT 

Pliers; hammer,- saw; and knife are supplied by worker. 

Polishing wheels-. Usually laminated muslin wheels 
having the circles of muslin sewed together near the cen- 
ter but with the outer edges loose. A hole through the 
center of the wheel is provided for mounting it on the 
arbor of a Polishing Lathe. Muslin is used for oiling and 
cut and gloss operations. Other wheels are (1) felt, for a 
coarser finish called mat (2) wire wheel for a coarser 
finish called satin (3) special bristle brushes usually used 
for oiling operations. 

Polishing compounds of varying obrasiveness-. Abra- 
sive compounds which (in the order of their abrasiveness) 
are known as lea, tripoli, white diamond, and crocus are 
available in the form of sticks about 6 to 10 inches long 
and 2 inches in diameter. Lea is used to produce mat 
finishes. Tripoli is used for oiling (a cutting operation in 
which much oil is used.) White Diamond is used for light 
cutting and is advantageous because it is less oily than 
tripoli and the articles need not be cleaned after polish- 
ing. Crocus, which is a very fine abrasive, is used for 
polishing to a high gloss. 



(Polishing Lathe, Bench Model, % 



Polishing Lathe-. 
H.P., 3600 R.P.M., manufactured by the Diamond Machine 
Company, Providence, Rhode Island). A variable speed 
electric motor having an arbor extending from one side 



Per Cent 
of Time 



Degree 
of Skill 



JOB REQUIREMENTS 95 

FIGURE 15.— Continued 



Supplementary Sheet 

Schedule Number 



Date 11/17/46 



Sheet 4 of 6 Sheets 
Job Title POLISHER 

II. EQUIPMENT (Continued) 

on which interchangeable polishing wheels can be 
mounted. Different speeds are required for different pol- 
ishing operations; 1700 R.P.M. being desirable for coarser 
finishes like mat and satin, and speeds as high as 3600 
R.P.M. being used for the gloss finishes. 

Rake: A simple tool made by driving many nails 
through a short length of wood so that their points pro- 
ject; this is used to dress the polishing wheels. 

Emery stone-. A piece of broken emery wheel used to 
dress the polishing wheels. 

Hook.- A steel wire hook with a wooden handle; by 
hooking this into a piece of jewelry, especially initials, it 
is possible to hold a piece that would otherwise be pulled 
out of hand by the polishing wheel. 

Forms-. Simple wooden jigs made by the worker to 
facilitate holding of the pieces of jewelry,- some are made 
to hold several pieces at one time. 

III. MATERIAL 

None. 

IV. SURROUNDINGS 

There is a constant, noisy hum from the many 
Polishing Lathes and the exhaust system in the workroom. 
Each Polishing Lathe is hooded and is locally exhausted 
to draw off dust from the wheels. Despite these provisions 
the surroundings are quite dirty. The worker's hands and 
clothing are soiled by the compounds used. 

V. HAZARDS 

There is danger of injuring the hands when the 
article being polished catches in the revolving wheel and 
is pulled from the worker's hands. Slight burns from the 
heated articles of jewelry may be incurred. 



96 PERSONNEL MANAGEMENT 

FIGURE 15.-Confinued 



Supplementary Sheet 

Schedule Number 



Date 



7 7/77/46 



Sheet 5 of 6 Sheets 



Job Title 



POLISHER 



VI. REGISTRATION AND PLACEMENT AIDS 

Basic Requirements-. Some polishing experience is required, 
in which the worker has learned the "feel of the wheel" 
sufficiently to be able to control the pressure against the 
wheel to produce the desired surfaces. 

A knowledge of polishing compounds and the polishing 
operations for which they are appropriate is required. 

Must be able to distinguish between shades of color or 
luster to produce evenly polished surfaces. 

Variable Requirements-. Determine: 

What kinds of metal worker will polish. 

(Brass, silver, gold, aluminum and plated 
articles are polished.) 

What kind of articles worker will polish. 

(Slightly different skill is required to polish 
costume jewelry, rings, chains, cases, and 
bracelets.) 

What polishing operations worker will do. 
(Some workers specialize on such opera- 
tions as cut and gloss, oil, mat, satin, or 
gloss finish; while others are able to do 
all.) 

VII. DEFINITION OF TERMS 

Oiling: The act of cutting through the surface 
of metal using an oily compound which must be washed 
off. 

G/oss: A high luster finish produced by polish- 
ing with a fine abrasive,- also a term applied to the opera- 
tion of producing such a finish. 

Cut and Gloss-. The procedure of smoothing 
metal surfaces with a fairly abrasive compound which re- 
quires little oil and the immediate polishing to high luster 
on another wheel with a fine abrasive. The operations 
are combined when the cutting can be done with a com- 
pound which need not be washed off before glossing. 



JOB REQUIREMENTS 97 

FIGURE 15.-Conf/nuec/ 



Supplementary Sheet 

Schedule Number 



Date 1 1/17/46 



Sheet 6 of 6 Sheets 
Job Title POLISHER 



VII. DEFINITION OF TERMS (Continued) 

Mat: A dull finish produced by polishing with 
a coarse abrasive; also the act of producing such a finish. 

Satin: A soft finish produced with a wire brush 
wheel. 

Clean Wheel: A light polishing operation in 
which no compound is used on the polishing wheel. 

VIII. COMMENTS 

Job Title and Alternate Title: There is some justification 
for using the alternate title JEWELRY POLISHER in these 
items because there are POLISHERS in other industries who 
while using somewhat different techniques, are capable of 
being confused with this job. 

Relation to Other Jobs: Experienced POLISHERS are usually 
hired, but occasionally WASH BOYS or male JIGGERS 
may be promoted to the job. 



98 PERSONNEL MANAGEMENT 

formed, should not be permitted to color the over-all description. Fi- 
nally, it is essential to include information on how a given job ties in 
with other jobs, in terms of both work and procedures and organization 
structure. This insures against the writing of needless descriptions and 
assures that approved descriptions fit into an integrated pattern. 

Further useful information regarding the preparation of job descrip- 
tions and specifications may be obtained by studying actual practice in 
these matters. For examples, see Figures 13, 14, and 15, above. These 
materials merit close study because they illustrate the care that must go 
into the development of good job specifications. 

To those who examine such materials as these for the first time, the 
procedures involved may appear unduly complex, but with practice they 
become less formidable. Indeed, after practice along such lines, one 
wonders how any useful information was obtained previously. 

QUESTIONS AND PROBLEMS 

1. What are the major operative functions of personnel management? Show 
how they are interrelated. 

2. Why is a specification of job content fundamental to the procurement func- 
tion? Need these specifications be in written form? 

3. Distinguish between the following terms: job, position, occupation, and 
station of work. 

4. What major steps would you take in following a program of job specifica- 
tions? Why is it desirable to start with a good system of job titles? 

5. What is the Dictionary of Occupational Titles? How can it be used in a 
program of job specification? 

6. Of what use is the various information that is listed in this chapter as illus- 
trative of what is sought in building job specifications? Take several of the 
items listed and show how they might be used in selecting, placing, and 
training employees. 

7. Explain how job specifications are particularly useful in connection with 
such special classes of workers as female employees, apprentices, and handi- 
capped workers. 

8. If you know of a company that does not use job specifications, try to inter- 
view someone who can tell you why they do not use them. What is your 
opinion of their reasons? 

9. While gathering information for a job specification, you find that the 
supervisor's opinion of the duties on a given job are much lower than those 
of the operator. How would you, as a representative of the personnel depart- 
ment, go about handling this difference of opinion? 

10. What factors or forces exist that suggest the advisability of periodic revi- 
sions of job specifications? 



JOB REQUIREMENTS 99 

11. Define the term "job analysis." Distinguish between job analysis, job speci- 
fication, and time and motion study. 

12. Where in the organization structure would you place responsibility for job 
analysis studies? Why? 

13. How should the unit made responsible for job analyses be staffed? What 
factors determine the choice to be made? 

14. What are the advantages, disadvantages, and conditions of most favorable 
usage of the questionnaire and interview methods of studying jobs? 

15. Whichever method of job analysis is used, what preparatory steps should 
be taken and what safeguards erected? 

16. Select a job or occupation in which you are interested, or one regarding 
which you can readily obtain information, and write a job description for 
it following the form outlined in this chapter. (Serviceman, streetcar con- 
ductor, gas-station attendant, housewife, fraternity cook, etc., make interest- 
ing case studies.) Be sure to follow the suggested instructions concerning 
information gathered, style of writing used, and presentation of findings. 

17. Why is it important to define the minimum acceptable standards for em- 
ployment on a job specification rather than the average or maximum? 

18. After a specification is written by a job analyst, by whom should it be ap- 
proved? 

19. What advantages would accrue from having a job specification read by 
employees and supervisors before receiving final approval? What are the 
possible disadvantages? 

20. What has the purpose for which a job specification is to be used to do with 
how it is constructed? Do you see any reason why a given job specification 
could not be used for job evaluation purposes as well as for selection and 
training purposes? Would a multipurpose specification be too costly and 
too cumbersome? 



CHAPTER 



6 



Manpower Requirements 



LABOR REQUIREMENTS 

After the nature of jobs is determined, it is then appropriate to ascer- 
tain the characteristics which labor must have to fill the jobs in ques- 
tion. This phase of procurement involves two large determinations: 
first, the number of employees that must be procured and, second, the 
qualifications that applicants must possess to qualify for vacancies. 

ESTIMATING QUANTITIES OF LABOR 
STEPS IN ESTIMATING 

In many companies, advance preparations are not made to ascertain 
how much labor of various kinds will be needed. Only after vacancies 
occur or their occurrence is a certainty are steps taken to find replace- 
ments. For example, when a supervisor concludes that an employee 
who has been absent for several days is not going to report back to 
work, or the supervisor is so informed by an unexpected telephone call, 
he begins more or less urgently — depending upon the pressure of work 
— to look for new help, or he asks the employment section to find a re- 
placement. Although this method of ascertaining the quantity of labor 
needed is simple to follow, it possesses little else to commend it. On 
the contrary, its use aggravates interruptions to production; tends to re- 
sult in hurried and hence poorly considered selections; and is wasteful 
of executive time. Therefore, its continued use can probably be con- 
doned only when the replacements that have to be made are few and 
far between. 

The effectiveness of hiring can be raised by forecasting labor re- 
quirements. While such forecasts are not simple to make, the results 
are well worth the effort. During World War II, for example, many 
companies found it desirable to work out schedules of replacements 
that would have to be made because of draft calls by Selective Service 
Boards. By compiling lists of employees, classified according to sex, age, 

100 



MANPOWER REQUIREMENTS 101 

dependency, and importance to the industry, it was possible to determine 
how many employees were likely to be drafted by the armed forces. In 
turn, plans could be laid for seeking or training replacements. 

On the other hand, variations in labor requirements due to fluctua- 
tions in the volume of production are more difficult to foresee. Random 
fluctuations within the broad swings of the business cycles are particu- 
larly troublesome in this regard. Although forecasts in such instances 
are likely to be more or less in error, nevertheless the fact that the fore- 
casts were made places the hiring officers in a better position to cope 
with the actual conditions. The major steps in estimating labor require- 
ments are as follows: 

1. Forecast sales 

2. Estimate master production schedule 

3. Establish departmental production schedules 

4. Convert production estimates into labor requirements 

5. Tabulate present working force 

6. Estimate number of employees to be separated from payroll 

7. Deduct Item 6 from Item 5, to determine net working force 

8. Deduct Item 7 from Item 4, to determine replacements to be made or 
employees to be released 

To illustrate these steps, an example is taken from the field of pro- 
duction, although the same procedures would be applicable to em- 
ployees in sales or office work. 

THE SALES FORECAST 

The sales forecast is the foundation upon which the estimate of 
labor requirements is built. Until sales for a definite period in the future 
are estimated, it is impossible to follow a logical sequence leading to a 
predetermination of labor needs. This may be seen by working back 
from labor requirements. Thus, how much labor is needed in a given 
department depends upon factory schedules, which, in turn, depend 
upon sales forecasts and storage policies. Of course, the initial step of 
making a sales estimate depends upon an interpretation of future pos- 
sibilities, a matter which invariably includes a margin of error. Such 
margins result in smaller losses than those which accrue when labor 
estimates are left to hit-or-miss methods. Moreover, since most com- 
panies make sales forecasts for other purposes, e.g., in preparing finan- 
cial budgets, there is little reason why the sales forecast should not be 
used for estimating labor requirements. 

Sales forecasts are made and set up in a number of ways. Table 2 (p. 
102) is illustrative of the data contained in such a forecast. In this in- 



102 



PERSONNEL MANAGEMENT 



stance the forecast is made by weeks for the next three months, then on 
a monthly basis for the following three months, and finally upon a quar- 
terly basis. A detailed picture is obtained for the immediate future, while 
general estimates are sufficient for any action that need be taken regard- 
ing the later periods. Such forecasts are usually revised weekly or 
monthly, as conditions in a particular case demand. 



TABLE 2 
The Production Operating Company 
July 1, 19 , to June 



Report of Sales Forecast 
30, 19 





Product A 


Product B 


Product C 


Week ending: July 6 

13 

20 

27 

Aug. 3 

10 

17 

24 

31 

Sept. 7 

14 

21 

28 

October 


10,100 
12,250 
13,700 
16,100 

18,720 
22,200 
26,000 
26,200 
25,800 

24,200 
23,800 
21,100 
21,050 

75,500 

68,500 

62,000 

150,000 

120,000 


102,000 

101,800 

100,300 

99,800 

96,300 
95,700 
94,600 
92,100 
90,000 

86,500 
81,900 
72,200 
66,350 

280,000 

321,500 

383,300 

1,250,000 

1,575,000 


60,010 
59,200 
58,050 
59,300 

55,700 
55,200 
53,600 
53,300 
56,800 

52,950 
55,900 
53,600 
54,120 

248,000 


November 


242,000 


December 


263,000 


January-February-March 


990,000 


April-May-June 


1,110,000 



In making the forecasts, recourse may be had to a number of sources 
of information: 

1. Past sales, set up in statistical or graphical terms, may be used to devise 
a pattern for the future. This method presupposes that cyclical and sea- 
sonal fluctuations in the past are likely to be projected into the future. 

2. Estimates of sales may be obtained from local sales units or salesmen. 
These estimates are then summated by areas and products to obtain the 
total figures. This method presupposes that personnel in local units are 
best able to determine how sales are likely to go in their areas and that 
a summary of such estimates is an excellent forecast of future events. 

3. Estimates of purchasing power are used in some cases to derive sales fore- 
casts. This method is based on the assumption that if one can determine 



MANPOWER REQUIREMENTS 



103 



how much customers have to spend, it will be possible to figure out what 
one's own sales are likely to be. 
4. Interpretations of local or national trends in the business and political 
world are also used to calculate what future sales are likely to be. This 
method presupposes that such things as tax and labor legislation or gen- 
eral business conditions have an important effect up individual sales 
possibilities. 

Ordinarily, a combination of these methods is employed. By starting 
with local estimates, comparing with past sales, adjusting for purchasing 
power, and then adjusting for possible economic and political changes, 
it is possible to derive very accurate estimates. All of this is time-con- 
suming and expensive, but these are necessary costs of scientific manage- 
ment. 



PRODUCTION SCHEDULES 

Inasmuch as sales ordinarily fluctuate more than is desired for pur- 
poses of production, most companies do not produce strictly to the 
sales forecast. Instead, a production schedule is worked out which levels 
out the peaks and valleys of the sales estimate. The degree to which the 
production schedule is stabilized in comparison with the sales schedule 

TABLE 3 

The Production Operating Company Production Schedule 

July-September, 19 



Week Ending 



July 6 
13 
20 
27 

Aug. 3 
10 
17 
24 
31 

Sept. 7 
14 
21 

28 



Product A 



Product B 



15,000 


95,000 


60,000 


15,000 


95,000 


59,000 


15,000 


95,000 


58,000 


15,000 


95,000 


58,000 


15,000 


90,000 


57,000 


15,000 


90,000 


56,000 


15,000 


90,000 


55,000 


15,000 


90,000 


54,000 


15,000 


90,000 


53,000 


15,000 


86,000 


54,000 


15,000 


86,000 


54,000 


15,000 


86,000 


54,000 


15,000 


86,000 


54,000 



Product C 



is largely dependent upon the storability of the products in question and 
and their nonsusceptibility to the style factor. It is uneconomical to build 
up inventories of locomotives, for example, during slack periods, be- 
cause the cost of storage (in the fullest sense) would offset economies 
of stabilized production. On the other hand, leveling out of production 



104 



PERSONNEL MANAGEMENT 



S 



is practicable in cases of low unit value and easily storable products, 
such as soaps. But where style obsolescence is important, production 
schedules must be worked out closely with the sales curves. Usually 
some stabilization of production schedules is feasible, an example of 
which may be seen in Table 3 (p. 103) ; it was derived from the sales 
forecast in Table 2. 

DEPARTMENTAL SCHEDULES 

After factory schedules are computed, departmental work loads can 
be established. These will be easy or difficult to establish, depending 
upon the variety of work performed within a department. In cases where 

TABLE 4 

The Relation between Factory and Departmental 
Schedules 



Date 


Product X 
Factory Schedule 


PartX 

Department A 

Schedule 


March 4 

5 


2,000 
2,000 
2,200 
2,400 
3,000 
3,000 
3,100 
3,300 
3,500 
3,500 


5,000 
4,000 


6 


4,400 


7 


4,800 


8 


6,000 


11 


6,000 


12 


6,200 


13 


6,600 


14 


7,000 


15 


7,000 


18 




19 




20 




21 




22 









a department works upon one or a few operations or parts, the load of 
work can quickly be derived from the factory schedule. Thus, if the 
department in question must finish two units of a given part for each 
unit of finished product five working days before final production is 
completed, the departmental schedule can be obtained by multiplying 
the quantities on the factory schedule by 2 and then advancing the in- 
dividual dates on the factory schedule by the number of days that it takes 
for units of work to travel from the department in question to the end 
of the production line. The data shown in Table 4 are based upon the 
foregoing information. 

DETERMINING LABOR NEEDS 

The departmental production schedules or estimates provide the 
basis for determining total labor needs. Information must also be ob- 



MANPOWER REQUIREMENTS 



105 



TABLE 5 

Estimated Labor Requirements 

Department A 



Kinds of Labor 



Supervisory 

Clerical 

Set-up men 

Drill press operators: 

Grade 1 

Grade 2 

Grade 3 

Bench hands: 

Grade 1 

Grade 2 



Unit 

Require- 
ments 


Week Ending 
March 8 


i Week Ending 
March IS 


Production 
Schedule 


Man- 
Hours 


Production 
Schedule 


Man- 
Hours 


Variable 
Variable 
Variable 


24,200 


80 

120 

80 


32,800 


80 
140 

90 


0.02 
0.01 
0.005 




484 
242 
121 




656 
328 
164 


0.008 
0.006 




194 
145 




262 
197 



tained in regard to how much labor of various kinds is needed for each 
unit of output. It is then a simple process to multiply these unit quan- 



FIGURE 16. Productivity versus Personnel for Varying Number of Man-Hours* 



20 



£ 16 

c 
o 



a. 12 



I 8 

4) 

£ 

z 

ii 4 











/ 


5,000 
Aan Hours 




















^o^ 
























__^0-*"^—' 


^^ 


-"■^"""'Z. - " 


-^3^ 


3aooo_ 




^^ 


-"S^ "*■ 


«-" —^-^" 











100 200 300 400 500 600 

Y = Number of Productive Personnel 



700 



800 



Relationships between the number of productive personnel, working one 8-hour shift a 
day, 25 days a month, and the number of units to be completed a month are shown in this 
graph. Graph shows relationships where the total of man-hours needed to complete each 
unit varies from 5,000 to 30,000. As an illustration of how to use the graph, assume that 
4 units per month of a product which requires 17,000 man-hours to complete, are needed. 
By following the 17,000 man-hour line to point where it intersects the 4 co-ordinate, it 
is found that 340 productive workers will be needed. 



* Source: Mark H. Smith, "Graphs Aid in Visualizing New Production Programs," Factory Management and 
Maintenance, April, 1946, p. 93. 



106 



PERSONNEL MANAGEMENT 



tides by the estimated production. In Table 5 (p. 105), for example, 
the first column shows the kinds of labor needed in Department A to 
manufacture Part X; the second column shows the amounts of labor 
needed per unit of production; and in succeeding columns are shown 
alternately the production schedule for each week and the man-hours 
needed to complete the schedules. Inasmuch as the amount of labor of 
particular kinds needed does not always vary proportionately with pro- 
duction, it is necessary to work out tables or graphs to show the varia- 
tions in labor as output changes. Figure 16 (p. 105) illustrates the use 
of charts to provide such answers. Some companies prefer to tie in labor 
estimates with their budget programs, in which case labor requirements 
would be stated in financial as well as hourly terms, as illustrated in 
Table 6. 

AVAILABLE LABOR AND PAYROLL CHANGES 

After the foregoing pictures of labor requirements are determined, it 
is then necessary to ascertain how much labor of various kinds is avail- 
able to produce the output for the period of time in question. These 
two classes of information can be compared to compute labor to be 
added. In equation form, this problem resolves itself as follows: 

Total labor requirements less Available labor equals Labor 
to be added to (or removed from) the payroll. 

The computation of available labor begins with a listing of the present 
labor force. From this is subtracted the estimated number of employees 
who will leave the payroll for various reasons. This task of estimation 



TABLE 6 

Estimated Labor Requirements 

Department A 



Kinds of Labor 



Supervisory 

Clerical 

Setup men 

Drill press operator: 

Grade 1 

Grade 2 

Grade 3 

Bench hands: 

Grade 1 

Grade 2 



Week Ending March 



Man- 
Hours 



120 



484 
242 
121 

194 
145 



Dollars 



112.00 
102.00 
100.00 

435.60 

204.70 

96.80 

150.50 
101.50 



Week Ending March 15 



Man- 
Hours 



140 
90 

656 

328 
164 

262 
197 



Dolh 



112.00 
119.00 
112.50 

590.40 
278.80 
131.20 

196.50 
137.90 



MANPOWER REQUIREMENTS 



107 



is seldom easy. However, from a careful study of cyclical and seasonal 
trends, turnover data, the ages of present employees, marriage rates, 
and absenteeism records, it is possible to establish reliable estimates. 
Figure 83 (see p. 618) illustrates a case study of absenteeisms, a record 

TABLE 7 

Departmental Separations 

Machine Department A 

Week Ending September 28, 19 

Drill Press Operator 

Number on payroll 30 

Quits 1 

Transfers and promotions 2 

Estimated discharges 1 

On leave 1 

Pensioned 

Average absenteeism 1 

Miscellaneous (loaned to tool room) 1 



Total 



separations 



Number 



liable , 



23 



of which is essential in determining how much of an allowance must be 
made for the fact that all on the payroll will not show up for work. 

A simple estimate of separations from a departmental payroll is illus- 
trated in Table 7. 



TABLE 8 
Estimates of Labor Movement 

Week Ending September 28, 19 



Department 



Labor needs . . . 

Available 

Shortage 

Overage 

Handled by — 
Transfer : 

In 

Out 

Promoted: 

In 

Out 

On leave: 
Returning 
Going. . . 

Layoffs 

Hirings .... 



108 PERSONNEL MANAGEMENT 

The figure of net available labor is then subtracted from total labor 
needs, to determine how much labor must be added to (or subtracted 
from) the payroll of each department. Such computations can be set 
up in table form, as shown in Table 8 (p. 107), to indicate overages 
and shortages by departments and how the differences are to be han- 
dled. Thus, in the example cited, in Department A, which is short five 
employees, the shortage is expected to be made up by one transfer, one 
promotion, and three hirings. In Department B, the overage is to be 
handled by two transfers, one on leave, and one layoff. 

LABOR TURNOVER 

1. Significance. One of the oldest devices of estimating labor 
requirements is through labor turnover calculations. Inasmuch as va- 
cancies are created by employees leaving the company, it is only wise to 
estimate statistically how many are likely to leave. Thus it may be pos- 
sible to learn about the number of job vacancies, even though who 
specifically is to leave cannot be ascertained. Such estimates are best 
made in terms of past turnover. Knowing trends of turnover is an ex- 
cellent means of appraising how many vacancies are likely to occur in 
the future. 

2. Nature of Turnover. "Labor turnover" refers to the influx 
and efflux of the working force. It may be measured in terms of acces- 
sions to, separations from, or replacements on the payroll and may be 
classified as avoidable or unavoidable. The results obtained from meas- 
urements of any one of these evidences of turnover are subject to criti- 
cism; yet all are useful in greater or lesser degree. The important point 
to remember is that turnover measurements are most useful when com- 
pared upon some basis, such as time or area, and when the causes thereof 
are eliminated and not disregarded. How this may be done is shown in 
the following notes on measures of labor turnover. 

3. Measurement. Labor turnover may be measured simply by 
relating accessions or separations during a given period to the average 
payroll for that period. For purposes of consistency and comparability, 
the month is the period commonly used. For example, if a company had 
an average payroll during a given month of 600 (585 at the beginning, 
plus 615 at the end, divided by 2), had taken on 50 employees and 20 
had been separated from the payroll, then — 

1. Based upon accession figures, turnover is calculated as follows: 

— X 100 = 8.33 per cent. 
600 r 



MANPOWER REQUIREMENTS 109 

2. Based upon separation figures, turnover is calculated as follows: 

— X 100 = 3-33 per cent. 
600 r 

The important questions in either case would be: (1) How do these 
figures compare with those of previous periods and other plants? (2) 
What caused variations? Of course, neither would be useful measures 
during wide cyclical and seasonal swings. Thus, during periods of 
prosperity the separation formula would show no turnover; and during 
periods of depression the accession formula would show no turnover. 

As a means of minimizing cyclical effects upon turnover calculations, 
some companies average the accession and separation figures and then 
divide by the average working force. Based upon both accessions and 
separations, turnover is calculated as follows: 

50 + 20 

■ X 100 = 5-83 percent. 



600 

It should be noted that when monthly turnover percentages are 
converted to an annual basis by multiplying by 12, the resulting per- 
centages are often unbelievable. Some companies have been known to 
have a turnover of their working force of over 100 per cent. In other 
words, their working force is, on the average, replaced within the period 
of a year. 

Although the foregoing formulae are simple and do provide indica- 
tors of trends, they fail to distinguish the costly aspect of turnover, 
that is, the replacements of separations necessary to carry on produc- 
tion. Accessions to the payroll are not necessary evidence of unsatisfac- 
tory conditions. On the contrary, they may be a sign of a highly prof- 
itable situation. And separations, when not replaced, may be a sign of 
inescapable reduction of labor force. But when a company fails to hold 
some of its employees, it must go to the expense of hiring and training 
replacements merely to maintain production. A formula based upon 
replacement figures will serve to detect when such failures are tending 
toward undesirable levels. 

The most commonly used formula for calculating replacements is 
that of net labor turnover, which the Bureau of Labor Statistics of the 
United States Department of Labor uses to measure turnover on a na- 
tional basis by lines of manufacturing and by types of industries. Data 
for these reports are collected by means of the form illustrated in Ap- 
pendix B (p. 642-44). 

4. Detailed Comparisons. Over-all measures of labor turnover 
are generally useful only as trend indicators. It is necessary to make de- 



110 PERSONNEL MANAGEMENT 

tailed measures of comparisons. Thus separation should be classified by 
departments, to get behind over-all figures; and causes of separations 
should be detailed under such headings as the following: 

1. Death 

2. Pensioned or superannuated 

3. Accidents and illness 

4. Marriage 

5. Discharges because of unsatisfactory work, insubordination, and other 
disciplinary measures 

6. Short-time layoffs because of seasonal recesses 

7. Long-time layoffs because of cyclical recesses 

8. Voluntary quits for such reasons as returning to school, better jobs, or 
moving to new location 

The more detailed the analysis, the more accurate will be the answers 
that management will derive to its turnover problems. To get this detail, 
it is necessary to establish a procedure whereby all who leave the em- 
ployment of the company, in so far as possible, go through an exit in- 
terview in the personnel department before final payroll vouchers are 
approved. 

MAN SPECIFICATIONS 
GENERAL APPROACH 

The foregoing has served to provide an answer to the quantitative 
question of how much labor, of various kinds, is required by a given 
company. Another major task, and one far more difficult, is that of 
specifying the personal characteristics that labor must possess if given 
workers are to perform assigned tasks capably. 

A number of approaches may be followed in drawing up personal or 
"man" specifications. The line of least resistance is simply to use the 
job specification, which describes the duties to be performed on given 
jobs. For example, the specification of duties for a drill press operator, 
let us say, would indicate that such a worker must know how to set up 
a drill press, to drill holes, and to check the accuracy of his work. This 
at first glance might seem to be of use to those who are to do the hiring. 

Such a mere enumeration of duties, however, would soon be found 
to be of little use. It says nothing, in the first place, about how fast or 
how accurately the operator is expected to work. In the second place, 
it gives no clues by which one can look at a candidate and determine 
whether or not he might become a good drill press operator. 



MANPOWER REQUIREMENTS 



111 



Although many companies apparently rely upon such job specifica- 
tions to measure candidates, the trend is toward a conversion of job 
duties to man characteristics called for by the job duties. Such conver- 
sions may be made simply in the minds of those who do the hiring, or 
they may be formal statements, examples of which are noted in the fol- 
lowing paragraphs. Where such conversions are made, personal char- 
acteristics tend to be grouped as physical, mental, and emotional and 
social characteristics. 



PHYSICAL SPECIFICATIONS 

Undoubtedly, the easiest approach to the task of writing man speci- 
fications is to list the physical qualifications which are called for on 
given jobs. This has reference to the obvious fact that various kinds 
and degrees of physical capacities are required on different jobs. Thus, 
a "stock chaser" has to do a lot of walking, whereas a drill press opera- 
tor does almost all of his work sitting or standing. And an assembler 
of parts in the tail section of an airplane should be small in stature, 
whereas a warehouseman should possess a large and strong physique. 

A simple yet effective plan for recording and utilizing physical speci- 
fications is shown in Figures 17, 18, and 19. Although this plan has 
been developed for use in connection with the placement of disabled 
workers, it is useful in normal placements. The form shown in Figure 

FIGURE 17. Job Requirements Card* 




msmaam 

Source: The Physically Impaired (Association of Casualty and Surety Executives, 1945), p. 9. 



112 PERSONNEL MANAGEMENT 

FIGURE 18. Physical Capabilities Analysis Card* 




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Ibid. 



FIGURE 19. Matching Job Requirements and Personal Capabilities* 







An Analysis of Job Requirements 
FOR PLACING DISABLED WORKERS 








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MANPOWER REQUIREMENTS 113 

17 is used to record the physical requirements of various jobs, which are 
listed in the left-hand column. At the top of the form, all capabilities 
that might be required are listed. Then, upon the basis of a job analysis, 
a check mark is placed under each capability that the job in question 
calls for. Thus the job of drill press operator has checks under the fol- 
lowing headings: partial standing, walking, use of right hand and 
partial use of left, raising right arm above shoulder, fair vision, poor 
hearing acceptable, noisy working conditions, possibility of skin irrita- 
tions, and impossible for a blind worker. 

Figure 18 shows a form used to record the physical capabilities pos- 
sessed by an individual applicant. The same headings of physical ca- 
pacities, listed in the same order as in Figure 17, are employed. After 
interviews and examinations, the headings are checked to indicate which 
cannot be done by the person in question. With this information avail- 
able, it is then possible to match the two forms, as shown in Figure 19, 
by sliding the first along the second until the check marks match. The 
job or jobs for which an applicant may be hired, or to which transfers or 
promotions may be made, is thus quickly determinable for a given in- 
dividual. 

MENTAL SPECIFICATIONS 

In regard to mental specifications, this has reference to the various 
mental processes called for on particular jobs. It is ordinarily of little 
use to specify for a given job that the duties call for an ability to solve 
problems, to think, or to concentrate. Such specifications do not help in 
appraising a candidate. However, where a general approach to mental 
processes seems desirable, it is better done by specifying for a given 
job the required schooling or experience. In this way, a given educa- 
tional level, let us say four years of high school in the case of a stenog- 
rapher, may be used as an indirect measure of the mental processes re- 
quired on the particular job. 

Even better, however, is the attempt to specify particular types and 
degrees of mental characteristics. The following list is illustrative of 
characteristics that might be considered under this heading: 

General intelligence Ability to plan 

Memory of names and places Arithmetical abilities 

Memory for abstract ideas Reading abilities 

Memory for oral directions Scientific abilities 

Memory for written directions Judgment 

Memory for spatial relations Ability to concentrate 

Ability to estimate quantities Ability to handle variable factors 

Ability to estimate qualities 



114 PERSONNEL MANAGEMENT 

To obtain a measure of the degree to which the foregoing charac- 
teristics are required, some arbitrary method of grading is needed. Under 
some plans, each of the mental characteristics for each job is followed 
by a notation indicating whether it is required to a high, average, or low 
degree, or not at all. Because such measures are indefinite and do not 
mean the same thing to all concerned, some companies have followed 
the plan of using explanatory sentences to measure differences of degree. 
An example of such keyed sentences is as follows: 

1. A high degree of this characteristic is required on 

a) All elements of the job 

b) The major elements of this job 

c) The minor elements of this job 

2. An above-average degree of this characteristic is required on 

a) All elements of the job 

b) The major elements of this job 

c) The minor elements of this job 

3. An average degree of this characteristic is required on 

a) All elements of the job 

b) The major elements of this job 

c) The minor elements of the job 

4. A low degree of this characteristic is required on 

a) All elements of the job 

b) The major elements of this job 

c) The minor elements of the job 

5. This characteristic is not required on 

a) Any of the elements of this job 

b) The major elements of the job 

c) The minor elements of the job 

Thus the symbol "2b" written in after the characteristic "memory for 
oral directions" would indicate that it is required to the degree "above 
average" only for the major elements of the job in question. 

Numerical scores may also be used in connection with degrees of 
differences for the mental characteristics. These may be entirely arbi- 
trary, for example, 90 to 100 representing very high requirements, 80 
to 89 high, etc. Or they may be based upon some recognized system of 
numerical scoring, such as those used in connection with the measure- 
ment of general intelligence, i.e., the intelligence quotient. 

EMOTIONAL AND SOCIAL SPECIFICATIONS 

Although the trend is by no means widespread, nevertheless there is 
a growing realization that perhaps the most important aspects of man 
requirements are those pertaining to emotional and social characteris- 



MANPOWER REQUIREMENTS 115 

tics. Various studies have shown that the technical requirements of most 
factory and sales jobs are not too difficult to meet. Moreover, other 
studies have shown that most of our labor troubles stem from poor emo- 
tional or social adjustment of employees. Since the human requirements 
seem to be a greater cause of trouble than the technical, a trend toward 
consideration of this factor has developed. 

Specifying required emotional and social characteristics is, however y 
a very difficult task. At present, it seems to be beyond the possibility of 
accomplishment by the average personnel department. When help from 
proficient psychologists, psychiatrists, or sociologists is available, con- 
structive progress in this direction may be expected. 

In most instances, however, about the best that can be done along 
these lines is to rely upon the interpretative judgment of executives who 
are aware of the significance of personality and social factors. For ex- 
ample, in one company the supervisors have been given short courses in 
elementary and applied psychology. They have been advised to note the 
personal problems that employees encounter in their respective depart- 
ments. They have also been instructed to observe the social and group 
relationships that have developed in their respective areas. With such 
observations in mind, the supervisors are then asked to check candidates 
for vacancies in their departments. By this means, at least a rough form 
of personal and social specifications has been developed in the minds of 
the supervisors. Such specifications are far from precise, but they are 
also far better than nothing at all. 

In this matter of personal and social adjustments, a few companies 
are also giving serious consideration to how the attitude of the wife of 
an employee will affect his success in the job. The practice here is to 
interview the wives as well as the husbands when the latter apply for 
jobs. In these cases, too, the "specifications" are not formally stated. But, 
again, in terms of what executives know about their company, employ- 
ees, and community, they attempt to determine how well a newcomer 
is likely to fit in successfully. Most persons are personally acquainted 
with cases in which a wife has become so dissatisfied with her husband's 
company or its community that this condition has affected adversely the 
husband's effectiveness. 

Although this trend of interviewing wives, as just noted, has not 
been widely adopted, it seems to have much merit. Someone may 
jocularly ask: Why not interview his children too? And the serious 
answer is that, if we are convinced that emotional and social adjust- 
ments are very important on job success in a given case and if we are 
convinced that the attitude of children is significant in the case of a 



116 PERSONNEL MANAGEMENT 

given candidate, then such interviews are not beyond the realm of 
plausibility. Either that, or wait until the specific individual fails. Then 
the losses of turnover will far outweigh the costs of what might have 
seemed to be a naive practice. And costs and losses are not respecters 
of ages. 

EXAMPLE OF MAN SPECIFICATIONS 

An excellent example of materials from which man specifications 
may be derived is provided by the tabulation below (pp. 116-20), 
which contains excerpts from a job analysis form used by a large retail 
establishment in connection with its job evaluation program. For each 
job that is studied, a decision is reached regarding the level or degree to 
which the following major factors are required: 

1. Knowledge and experience 

2. Skills and abilities 

3. Responsibilities 

4. Working conditions 

Close scrutiny of this form will show how useful is the variety of in- 
formation that is derived from it. Of special note is the fact that the 
form is built, not along lines of prosaic tradition, but along lines that 
would seek to solve the practical problems that must be met and solved. 
Certainly the section on social characteristics is a realistic recognition 
that such skills as well as technical skills have an important impact 
upon job success. 

JOB FACTORS 

I. Knowledge and Experience Required by the Job 

A. Amount of formal and/or specialized business or trade education or its 
mental equivalent required by the job 

1. Less than eight years — Some grammar school, simple arithmetic 

2. Eight to ten years — Some high school, business school 

3. Ten to twelve years — High-school graduate, or some high school and 
and some specialized education 

4. Twelve to fourteen years— Some college or university education 

5. Fourteen to sixteen years — College or university education 

6. Over sixteen years — College or technical school graduate 

B. Length of preparatory experience that the job requires 

1. Less than one week 

2. One week to four weeks 

3. One month to one year — Part outside and part company experience 



MANPOWER REQUIREMENTS 117 

4. One year to five years — Several different jobs or trade apprenticeship 

5. Over five years — Trade experience 

6. Over five years — Important supervisory work requiring wide experi- 
ence 

C. Assuming that the formal or specialized education and previous experi- 
ence requirements are met, length of time required to learn to perform 
job duties with minimum proficiency (quantity and quality) 

1. Less than one week 

2. One week to four weeks 

3. One month to three months 

4. Three months to twelve months 

5. One year or more 

II. Skills and Abilities Required by the Job 

A. Variety of machines or special hand tools operated 

1. One simple machine or hand tool 

2. Several simple machines and hand tools common to semiskilled oc- 
cupations 

3. Highly technical machine and/or hand tools 

4. Several different highly technical machines and/or hand tools 

B. Strength and endurance required by the job 

1. Lifting and/or carrying up to 30 lbs. not sustained, or up to 5 lbs. 
sustained 

2. Lifting and/or carrying up to 100 lbs. not sustained, or up to 30 lbs. 
sustained 

3. Lifting and/or carrying up to 200 lbs. not sustained, or up to 100 lbs. 
sustained 

4. Lifting and/or carrying up to 200 lbs. sustained 

C. Dexterity, precision, and/or acuity of senses required by the job 

1. Definitions. 

a) Dexterity — Ability to manipulate objects by deft, quick co- 
ordinated movements of fingers, hands, arms, feet, and/or legs 

b) Precision — Degree of accuracy required 

c) Acuity of senses — Keenness in: perceiving form, space, color, 
speed of moving objects; estimating weight, resistance, and ten- 
sion of objects by use of the muscular sense 

2. Work requires some manipulation within wide limits of precision, 
and/or normal sense perception 

3. Work requires some manipulation with high degree of precision, 
and/or acuity of all senses, or special acuity of one 

4. Work requires exceptionally high degree of dexterity, but only aver- 
age precision, and/or exceptionally acute sense perception of highly 
developed specialized senses 

5. Work requires a very high or exceptional degree of dexterity and 
precision 



118 PERSONNEL MANAGEMENT 

D. Verbal expression, both oral and written, required by the job 

1. Work requires very little to normal degree of verbal fluency 

2. Work requires specialized written expression in correspondence, re- 
ports, or specialized oral expression 

3. Work requires extremely diversified verbal ability, oral and written, 
delivered under pressure 

E. Initiative, ingenuity, and/or judgment (considering degree of super- 
vision received) required by the job 

1. Work requires very little judgment, initiative, or ingenuity. Decision 
followed or applied under close supervision. Routine work, outlined 
and started by supervisor. Standard policies and practices 

2. Work requires some judgment, initiative, and/or ingenuity. Decisions 
of average nature made by precedents or standards with close super- 
vision. Must follow suggestions and instructions but with some plan- 
ning as to course of action and order of work required 

3. Work requires above-average amount of judgment, initiative, and/or 
ingenuity. Decisions of average nature made by precedents or stand- 
ards without close supervision. Considerable imagination and shrewd- 
ness required in using new ideas followed by persistent development, 
and in planning and mapping course of action and order of work 

4. Work requires employee to make difficult decisions with few or no 
precedents or standards. Important to be quick and accurate without 
close supervision. Great ingenuity required in devising, planning, and 
developing course of action and order of work 

III. Responsibilities Required by the Job 

A. Direction or group leadership and executive supervision required by 
the job 

1. Leading one to ten persons on routine work 

2. Directing ten to twenty-five persons on variety of work 

3. Directing through other supervisors and including some responsi- 
bility for methods used and interpretation of policy 

4. Executive direction in organizing efforts of others by selecting, de- 
veloping, training, disciplining, and supervising employees 

B. Probability of equipment, cash, and/or material losses through diverted 
attention 

1. $ 5-$ 100 per month 

2. $100-1300 per month 

3. $300-$500 per month 

4. Over $500 per month 

C. Responsibility for directly influencing store sales position 

1. Little responsibility for directly affecting store sales position by means 
of related and/or suggestive selling to a clientele 

2. Responsibility for directly affecting store sales position by suggestive 
selling of moderately priced related items to a developed clientele 

3. Responsibility for directly affecting store sales position by suggestive, 



MANPOWER REQUIREMENTS 119 

promotional, and/or related selling of exclusive items. Must be con- 
stantly developing and maintaining clientele 
4. Major responsibility is to directly affect store sales position by pro- 
motional, suggestive and/or related selling of all types of merchan- 
dise. Must constantly develop and maintain clientele 

D. Responsibility for maintaining methods and operations affecting major 
cost factor (affecting profit) in the business 

1. Methods and operations followed are not a major cost influence and 
require average degree of accuracy 

2. Costly but highly routinized methods and operations followed. Con- 
stant check by supervisors prevents final errors 

3. Follows costly but well-defined methods and operations with high 
accuracy requirements with close supervision 

4. Follows costly but well-defined methods and operations with high 
accuracy requirements without close supervision 

5. Interprets and uses very costly methods and operations with great 
accuracy requirements with very little supervision 

E. Responsibility for safety of others 

1. Small chance of injury 

2. Considerable care required to prevent injury 

3. Extreme care required to prevent injury 

4. Responsible for equipment, methods, or personnel involving severe 
health or accident hazards 

IV. Working Conditions 

A. Physical and/or nervous strain due to degree of physical effort required, 
method of regulating amount of work, or the need for concentration 
and perseverance in the midst of distraction 

1. Normal physical and mental effort — not sustained 

2. Considerable sustained physical or mental effort 

3. Frequent excessive physical and/or nervous strain 

4. Sustained excessive physical and nervous strain 

B. Undesirability of working conditions due to accident or health hazard, 
extra cost to employee of special clothing or tools, or disagreeable sur- 
roundings 

1. Generally satisfactory surroundings, little hazard, and no extra ex- 
pense for clothing or tools 

2. Surroundings cause discomfort and strain, and/or some accident 
hazards present, or considerable expense in clothing or tools 

3. Disagreeable or hazardous working conditions 

4. Very disagreeable and dangerous conditions 

V. Social Characteristics of the Job (Contacts) 

A. Requirements for social adaptability in human relationships 

1. Limited social relationships in situations of minor importance 

2. Limited simple social relationships of major importance 



120 PERSONNEL MANAGEMENT 

3. Frequent social relationships; must deal repeatedly with unpleasant 
attitudes and situations of minor importance with immediate adjust- 
ment 

4. Constant delicate social emergencies of major importance 

B. Relationship that exists between this job and store reputation 

1. None to very little. Little opportunity for work results to affect opin- 
ion 

2. Close relationship between manner of doing job and outside opinion 
of store efficiency, etc. 

3. Constant major effect of work results on public and/or employee 
opinion of store 

4. Major responsibility is to mold and influence the reputation of the 
store in the minds of public and/or employees 

C. Personal appearance, including dress, posture, poise, features, and voice 
required by the job 

1. Social relationships and type of work require only average personal 
appearance 

2. Social relationships require above-average personal appearance 

3. Outstanding personal appearance required as part of the job 

QUESTIONS AND PROBLEMS 

1. By what methods may estimates of quantitative requirements for labor be 
made? What are the advantages and disadvantages of each? 

2. In making forecasts of labor requirements, regarding what types of business 
fluctuations must estimates be made? Distinguish between seasonal, cyclical, 
secular, and episodic fluctuations. Are there instances in which forecasts 
might have to be made on a daily or weekly basis? Illustrate. 

3. What are the major steps in estimating labor requirements? Indicate why 
each is significant. 

4. To what factors and conditions would you turn attention in making a sales 
forecast? 

5. To what extent should the sales division be permitted to establish sales 
programs? What do policies have to do with this question? 

6. What factors determine whether a company will produce to a sales curve 
or attempt to smooth out the production curve? 

7. How much weight would you give to personnel policies of guaranteed in- 
come plans or guaranteed employment plans in connection with stabiliza- 
tion of production schedules? 

8. Where would information regarding unit labor time be obtained? How 
would the calculations to determine how much labor is required differ when 
a given department produced a wide range of products from a department 
that produced only one product? 

9. What are the reasons for expressing labor requirements in dollar values 
and in man-hour units? 



MANPOWER REQUIREMENTS 121 

10. Why has labor turnover been of such long-standing use in business and 
industry? Of what use are such data? What pitfalls should be avoided in 
using turnover data? 

11. Under what condition would you use the accessions rate to measure turn- 
over? The separations rate? Both together? 

12. Why are such measures of turnover as those provided by the Bureau of 
Labor Statistics of particular usefulness? 

13. Why are emotional and social characteristics perhaps more important than 
technical characteristics on some jobs? 

14. What is your opinion of the importance of what a man's wife may or may 
not think about his job, company, or place of work? 

15. If emotional or social characteristics cannot be expressed quantitatively, what 
can be done to keep qualitative expressions from becoming vague and mean- 
ingless? 

16. By what means can man specifications be kept up to date? 

17. A given executive stated that he didn't need man specifications because he 
knew exactly the type of people he wanted for his jobs. Comment upon 
his comment. 

18. What is the difference between a job specification and a man specification? 
Which is easier to establish? Does this explain why the man specification 
is not as common as the job specification? 

19. Distinguish between job duties, standards of job duties, and employee apti- 
tudes. Illustrate in terms of a specific instance. 

20. Using the forms illustrated in the text, select a job which you are acquainted 
with or can obtain information on, and determine its man specification. 
Against this, check your own capabilities. How might you use the results 
disclosed by the comparison? 



CHAPTER 



7 



Sources of Labor Supply 



VARIABILITY OF LABOR SUPPLY SOURCES 

The hiring or placement procedure cannot be put into operation until 
suitable candidates are attracted. To do this effectively requires a knowl- 
edge of available sources of supply and how they may be tapped as oc- 
casion demands. These matters constitute the major interest of this 
chapter. 

Ordinarily, the various sources of supply to be discussed here would 
neither be available nor necessarily of interest to all companies. More- 
over, each source does not remain at a constant degree of usefulness 
but is affected by the general state of the labor market. The moral of 
these statements was illustrated very strikingly during World War II, 
when, on the one hand, sources such as over-age workers were utilized 
contrary to normal practice and, on the other hand, sources that previ- 
ously had been satisfactory in many cases dried up, such as the casual 
floating supply of labor. Hence a study of sources of supply in a par- 
ticular company must give consideration to state-wide and national con- 
ditions as well as to local factors. All that can be done here is to survey 
various sources of supply, noting their advantages, disadvantages, and 
conditions of most favorable usage. 

TYPES OF LABOR SOURCES 

Although a common and useful classification of sources of labor sup- 
ply is that of internal as opposed to external sources, it is not easy to 
establish border lines between them. Strictly speaking, internal sources 
refer to the present working force of a company. In the event of a 
vacancy, someone already on the payroll is upgraded, transferred, pro- 
moted, or sometimes demoted. Occasionally, the definition is expanded 
(and for understandable reason) to include the following: 

1. Those not on the payroll of a particular company but in the employment 
of affiliated or subsidiary companies 

2. Those who were once on the payroll of a particular company but who 

122 



SOURCES OF LABOR SUPPLY 123 

plan to return or whom the company would like to rehire, for example, 
those on leave of absence, those who quit voluntarily, or those on produc- 
tion layoffs 
3. Anyone who has not been on the payroll of the company but who is well 
known and vouched for by a present employee (essentially an external 
source) 

All sources not included within the internal supply area, such as adver- 
tising, employment services, schools, and floating labor, are external 
sources. 

THE INTERNAL SOURCE 

1. Advantages. The internal source is often credited with being 
better than the external. This contention is based upon a number of 
reasons. In the first place, it is argued that by cultivating the internal 
source the morale of employees in general is raised, because workers 
are thereby given concrete evidence that they are preferred over out- 
siders when good vacancies occur. On the surface, this argument does 
not prove that the internal source is a good source but rather that its use 
does have a healthy effect upon present workers. On the other hand, in 
so far as this policy of filling vacancies induces present workers to pre- 
pare themselves for transfers or promotions so that they are better than 
those who might have been hired from the outside, it is commendable. 
Moreover, so long as opportunities for present workers are made avail- 
able in this manner, there may also be an indirect effect, in that outsiders 
soon learn that the company in question is a good place to work, with 
the result that a better quality of external applicant will be attracted. 

Another and cogent argument in favor of the internal source is that 
the employer is in a better position to evaluate those who work for him, 
or who have worked for him, than the candidates who present them- 
selves from the outside. Inasmuch as a work test concededly is the best 
test, and if the company maintains a satisfactory record of the progress, 
experience, and service of its present and past employees, then the va- 
lidity of this argument is granted. However, k is essential that transfers 
and promotions be based upon measured merit, else the internal source 
will degenerate into a political monopoly for those on the payroll or 
into undeserved favoritism to those who once were with the company. 
Care must also be exercised in writing seniority policies or clauses in 
union contracts if the danger of unwarranted use of the internal source 
of supply is to be averted. 

2. Disadvantages. The chief weaknesses of the internal source 
are twofold: danger of "inbreeding" and possible inadequacy of supply. 



124 PERSONNEL MANAGEMENT 

The first of these weaknesses arises out of the fact that the learner sel- 
dom has ideas or notions that differ widely from those of his teacher. 
As a consequence, he seldom contributes any startling innovations or 
makes suggestions, which are so important in our competitive economy. 
His company, therefore, is not likely to be known for its progressive- 
ness and, indeed, may be left behind in the parade. On jobs in which 
originality counts heavily, such as advertising, style designing, and cer- 
tain types of selling, a practice of always filling vacancies from within 
is seldom followed. However, on jobs in which these qualities are of 
minor significance, the danger of "inbreeding" and "dry rot" is neg- 
ligible. 

The policy of using internal sources of supply also breaks down in 
periods when large numbers of vacancies occur or are created. Obvi- 
ously, it would have been ridiculous to argue that this was the best 
source during the war years, for instance. So long as the number of 
vacancies does not outrun the number who can be transferred or pro- 
moted, the adequacy of this source is not in question. But when one 
vacancy calls for a number of replacements because the employee who 
fills the vacancy must be replaced by another employee and so on to 
the point at which an outsider must be hired, or when large numbers of 
vacancies occur at the same time, the source is neither adequate nor 
desirable. 

3. Conditions of Favorable Use. For most favorable use of 
the internal source of supply, then, conditions must be right. The num- 
ber of vacancies to be filled must be within practicable limits, adequate 
employee records must be maintained, jobs calling for originality should 
not be assigned to present employees in blind adherence to seniority 
rules, and opportunities should be provided in advance for employees 
to prepare themselves for promotion. Much good will come, too, if 
publicity about well-merited transfers or promotions is carried in the 
company and local papers. 

THE EXTERNAL SOURCE 

Ultimately, of course, all vacancies must be filled from the outside. 
Even the company that prides itself upon its policy of filling vacancies 
exclusively from within must go to the outside to fill vacancies at the 
bottom of the promotional ladder. Hence every company must be ac- 
quainted in some degree with the kinds of varieties of external sources. 
The major groups of external sources are employment agencies, adver- 
tising, floating labor, recommended labor, miscellaneous sources, and 
unions. 



SOURCES OF LABOR SUPPLY 125 

1. Public Employment Agencies. The employment agencies, 
particularly the public agencies, have grown in importance in the field 
of employment in recent years. The public agencies are discussed here 
first, and then attention is directed to private agencies. 

The public agencies are represented by the several state employment 
services and the United States Employment Service, commonly known 
as "USES." Although the work of these groups has been closely inter- 
twined in recent years, the state agencies are separate entities. During 
World War II, the state agencies were absorbed by USES but were re- 
turned to their independent status on November 15, 1946. The discus- 
sion here will deal first with the USES and then with the services of a 
state employment unit. 

a) Development of Public Agencies. Although the public agencies 
now have an enviable position in the labor market, this reputation has 
been earned within the past several years. USES, for example, once pos- 
sessed an unsavory, if not laughable, reputation as a source of labor 
supply. Indeed, employers had recourse to it only for the most casual 
and unskilled labor. Its history goes back to 1918, when its existence 
as an independent unit was authorized within the Department of Labor 
and separate from the Bureau of Immigration, in which employment 
activities had been undertaken in 1907. 

During World War I, the federal employment service was named 
the sole recruiting agency for civilian workers in war industries. After 
the war, the service helped the returning veterans to get back to their 
old positions or to find new ones. With this work completed, the em- 
ployment service fell upon lean years. Impetus was given the USES dur- 
ing the depression years with the passage of the Wagner-Peyser Act 
in 1933, which provided for financial benefits to states accepting the 
provisions of the act regarding a national system of employment offices 
under the direction of the USES. 

b) Recent Growth of Employment Services. The heyday for the 
public agencies came with the passage of the Social Security Act and 
later with the advent of World War II. One of the major provisions of 
this act, it will be recalled, has to do with unemployment compensation, 
the purpose of which is to tide unemployed workers over relatively short 
periods until they can find new jobs. To be eligible for such compen- 
sation, displaced workers must, among other things, register with the 
employment services. This meant that the state employment services 
in 1938 were, theoretically at least, provided with a roster of all who 
were unemployed and desired to work. Moreover, the state agencies 
were given grants-in-aid beginning in 1937 if their employment com- 



126 PERSONNEL MANAGEMENT 

pensation methods conformed with federal standards. Among the fed- 
eral requirements was that the services should seek to find, if possible, 
jobs that were satisfactory for the registered unemployed who were 
seeking to qualify for compensation. Some agencies, to carry out this 
stipulation, went so far in getting information about available jobs, on 
the one hand, that they sent emissaries to various plants to learn more 
about their individual problems and requirements; and, on the other 
hand, they sometimes offered the facilities of trade, aptitude, and psy- 
chological tests to the unemployed in order to get a better picture of 
them to supply to potential employers. 

Thus the employment services not only were given the legal right 
to build up a roster of the unemployed but also were alert to the oppor- 
tunity of improving their own procedures, thereby making themselves 
better servants of employers. As a consequence, when World War II 
began, the employment services had attained an accepted position in 
the labor market. 

The greatest stimulus to the growth of the public services and, in 
particular, USES came with the advent of World War II. On January 1, 
1942, by presidential request, the state employment services were 
merged into USES. As time went on, USES was given various powers 
over hiring and employment matters that eventually gave it a practical 
monopoly in certain instances. To begin with, USES became a factor 
in the draft by being given a voice in determining which jobs were es- 
sential and which nonessential. Employers, in order to protect their key 
employees, were more than willing to open their files to this agency. As 
a consequence, it became even more expert on jobs and job require- 
ments. Later, the War Manpower Commission laid down hiring rules 
in which USES played a large role. Thus employees could not, without 
good and specified reasons, quit their jobs or be rehired by anyone else 
without a certificate of availability and a referral card from USES. 
Finally, for a time, USES was given the right to establish ceilings on 
employment and priorities for individual companies. Obviously, under 
these conditions, it is not surprising that in large measure USES became 
the employment agency of American industry. In August, 1949, the 
USES was transferred to the Department of Labor, under whose jurisdic- 
tion it now operates. 

c) Services of State Employment Agencies. The state employment 
units are the agencies which operate directly in the employment field. 
What they do is exemplified by the work of the Ohio State Employment 
Service. Its basic job is to serve both worker and employer — and indi- 
rectly the community — by acting as a clearinghouse for jobs and job 



SOURCES OF LABOR SUPPLY > 127 

information. Its program includes a number of activities which serve to 
carry out this fundamental task. 

The Ohio State Employment Service supports a full plan of employ- 
ment counseling. The aim is to assist the applicant to make a suitable job 
choice based on facts about himself and the labor market. To do this, an 
analysis is made of the applicant's experience, training, education, in- 
terests, abilities, aptitudes, and physical capacities. His school record, 
tests, and physical capacity ratings are reviewed in a personal interview. 
He is then given a picture of the labor market; of the kind and number 
of suitable opportunities; and of working conditions, salaries, required 
training, and promotional prospects in various jobs or establishments. 
And then he is helped to make a job choice or adjustment to labor mar- 
ket conditions, with actual referral to a job or employer. The counseling 
service gives special attention to young and inexperienced workers, in 
recognition of the critical point at which these applicants find them- 
selves in their working lives. 

The Service has also interested itself in the use of psychological tests. 
Proficiency tests, such as typing, dictation, and spelling, are given to ap- 
plicants for jobs requiring these skills. Aptitude tests — measuring po- 
tentiality to acquire skills — are available for over 200 jobs, including 
such as machine shop trainees, drafting trainees, clerical occupations, 
punch press operators, grocery checkers, and sewing-machine operators. 
And a general aptitude test battery is available to give an applicant a 
better idea of his potential ability to do various types of work. This is 
particularly useful in counseling applicants who are unable to find jobs 
for which they may be prepared. 

The state service operates in close touch with other state units af- 
filiated with the USES. Thus 1,800 employment offices located through- 
out the United States and its territories are at the service of applicants 
and employees through their local office. Thus local employers may be 
helped to find qualified workers outside the immediate area, and workers 
may be given reliable information about out-of-town jobs and employ- 
ment conditions. 

Another service along somewhat similar lines is the labor market 
information gathered by the state services. Summarized from the reports 
of local orifices is such information as number of men and women seek- 
ing jobs in each community, which industries are hiring and which lay- 
ing off, wage rates in each community, surplus and scarce occupations, 
and kinds of workers needed. 

The Service also offers a selective placement service for handicapped 
workers. In this regard, an analysis is made to ascertain the physical 



12§ PERSONNEL MANAGEMENT 

capacities possessed by a handicapped applicant. Analyses are made of 
jobs to ascertain physical demands. And the capacities of these appli- 
cants are matched with the physical needs of jobs. Help is also offered to 
employees to smooth the induction of handicapped workers into in- 
dustry. 

The Service also seeks to promote employment of minority-group 
workers at their highest skills. It attempts to broaden acceptance of 
minority groups by employers, labor unions, and community groups. 
And it provides technical information and advice on the orderly intro- 
duction, use, and integration of minority-group workers into a company. 

Special help is also available to war veterans. In this connection the 
employment service secures and maintains current information as to 
various types of available employment; interests employers in hiring 
veterans; maintains regular contacts with employer and veteran or- 
ganizations; and promotes the employment of veterans. 

The Service has interested itself in the employment problems of 
college graduates. Although the registration procedure for college grad- 
uates and other applicants is the same, the Service has taken steps to help 
college students in additional ways. Representatives of the Service ar- 
range meetings on college campuses. Interested students can schedule 
interviews for the purpose of asking questions about employment mat- 
ters and to seek guidance on their possibilities for placement or on need 
for adjustment. The employment service can also give useful advice on 
working toward promotions and on possibilities of promotions. 

The Service is also responsible for being prepared to carry out the 
aims and objectives of Defense Manpower Mobilization. In peacetime 
it serves to expand defense production, relieve labor shortages, and in- 
crease the fullest possible use of available labor in critical areas. In war- 
time, as noted earlier, the employment service becomes a paramount 
agency in the labor market. 

2. Private Employment Agencies. Private employment agen- 
cies have also grown apace with other sources during the recent years of 
labor shortages. These groups have tended to serve employees either in 
the technical and professional areas or in the relatively unskilled fields. 
In the former case, private employment services usually specialize ac- 
cording to such groups as office and clerical help, accountants and stat- 
isticians, engineers, salesmen, and dietitians. As a result of such speciali- 
zation, they presumably are in a position to interpret effectively the 
needs of their clients, to build up a list of technicians upon whom they 
can readily draw as needed, and to develop proficiency in recognizing 
the aptitudes and abilities of specialized personnel. When an employ- 



SOURCES OF LABOR SUPPLY 129 

ment agency does develop a reputation in connection with a particular 
class of employees, it undoubtedly proves to be a good source of supply. 
Since most employers do not have to hire various types of specialized 
help frequently, they are not in a position to develop an adequate source 
of supply for themselves and must turn to others for help. The ability of 
such agencies to be of service is also increased when local agencies or- 
ganize into national associations through which interregional informa- 
tion and needs can be exchanged. 

Some private employment agencies have, as noted above, restricted 
their clientele to the lower levels of worker skills. In such instances, 
they serve to attract applicants in numbers that the employer himself 
could not. This is particularly true of companies that have seasonal 
problems or are located away from the larger labor markets. Thus a 
company that has a seasonal logging operation, for example, may need 
quickly, but temporarily, a large, but miscellaneous, crew, including 
such workers as cooks and carpenters as well as lumberjacks. By turning 
to the employment agencies in larger cities, the employer can gather 
and ship out a group of floating workers that could scarcely be recruited 
in any other way. Employment agencies, by providing a more or less 
stable source of information about jobs, develop a classified clientele 
from which the employer can draw the particular skills he needs. 

In essence, then, the private agencies are brokers, bringing employers 
and employees together. For this service, they are compensated by fees 
charged against the employee or, more rarely, against the employer. The 
fee is usually computed as a percentage of a week's, two weeks', or a 
month's pay. 

Charging for this service is, of course, legitimate, but the practice has 
led to abuses which, for a time, cast suspicion upon almost all private 
employment agencies. It was not an uncommon practice for some em- 
ployment agencies to collude with employers, whereby applicants were 
kept on the payroll long enough for the agency to collect its fee which 
was then split with the employer. A new employee was then "hired," 
and he too soon lost his job. Such unscruplous practices led to state 
and local control being exercised over private agencies. Many of the 
employment agencies themselves led in the fight to remove unscrupu- 
lous operators. 

For a time after USES had strengthened its position in the labor 
market, some felt that the day of the private agency had ended. Perhaps 
some of the weaker units were forced out, but the remaining ones cer- 
tainly seem far from finished. Indeed, the competition has served as a 
tonic because the services of the private agencies have improved in the 



130 PERSONNEL MANAGEMENT 

past several years. Some private agencies are no longer content merely 
to bring employer and employee together but are utilizing testing de- 
vices to classify and evaluate applicants, are adopting scientific counsel- 
ing services to interpret the abilities of their clientele, and are employing 
advanced techniques of vocational guidance to increase the probabilities 
of correct placements. These advances have made private agencies even 
more attractive to employees who prefer their more person " and selec- 
tive characteristics. ^ A 

3. Advertising for Labor. Advertising in various media is also 
a widely used method of attracting labor. How much advertising is done 
usually depends upon the urgency of the demand for labor. In recent 
years the classified sections of metropolitan newspapers have been well 
filled with such advertisements. On the other hand, this source is scarcely 
used when other channels supply sufficient candidates. The main short- 
comings of this source are its uncertainty and the range of candidates 
that are attracted. Perhaps some of this is due to poor copy work because 
most ads are uninspired, uninteresting, and not clear. Even when an ad- 
vertisement is properly written and timed, the employer cannot be sure 
that it will "pull" the desired number of applicants. Moreover, he finds 
that he must cull the lot very carefully, since a good proportion of those 
who do present themselves are unqualified. And advertising copy must 
be written with even greater care when the media of radio and television 
are used, as is not uncommon at the present time. 

On the other hand, such advertisements should not be expected to 
do more than any advertisement can do — that is, attract attention and 
create a desire, which must be followed up by other appeals and selective 
methods. That many employers are aware of this is seen in the fact that 
they continued to use newspaper advertising during the war years, even 
when all hiring had to come through USES. In these instances, the ad- 
vertising was intended to create a desire upon the part of available 
workers such that they would ask USES to refer them to a particular 
company. When the medium of advertising is chosen carefully, the at- 
tention of desirable applicants can be attracted with a high degree of 
selectivity. For example, advertisements placed in trade journals or 
professional magazines can be directed so that only specific groups will 
be reached. 

4. Casual Labor Sources. Most companies rely to some extent 
upon the casual labor which daily applies at the employment office or 
gate. Here, again, the source is uncertain, and the candidates cover a 
wide range of abilities. Although it cannot be relied upon and does call 
for very careful screening, few companies care to shut off this source. In 



SOURCES OF LABOR SUPPLY 131 

the first place, it is an inexpensive source; the applicant comes to the 
door of the employer of his own accord. Second, there always is an oc- 
casional "good find" that makes up for the expense of culling. And, 
third, some companies believe it is good public relations — those in con- 
sumer-goods industries particularly (bakeries, food products, public 
utilities, etc. ) — to receive cordially all who come to the company prem- 
ises, whetfiCT or not jobs are or will be available. 

Wxieix u is desired to rely upon this source of supply, the physical fa- 
cilities of employment should be made attractive and convenient. More 
will be said in this regard later in this chapter, but it is worth noting 
that an inviting waiting room, conveniently located to a main street 
and easily reached, is necessary. Sometimes one wonders whether em- 
ployers are trying to discourage applicants when one sees the untidy 
waiting rooms provided for casual applicants. In some cases, applicants 
must wait outdoors, even during unfavorable weather. 

5. Recommended Labor. "Recommended labor" refers to all 
applicants who come to the employer upon the direct suggestion of a 
present employee or other employers. Some employers cultivate this 
source, feeling that it provides a preselected class of applicants. When an 
employee recommends a friend for a job, it is likely that he does this 
with some degree of care. On the one hand, he knows that to recom- 
mend someone who is unsatisfactory will reflect upon his own good 
judgment; and, on the other hand, he recognizes that his friend will not 
appreciate a lead that does not materialize in a good job. In his position 
of knowing something about the company and the friend, he can deter- 
mine whether or not the two are likely to be a good match. 

In addition, emphasizing this source of supply is likely to develop 
a high degree of loyalty among employees. It is stimulating to work for 
a company that encourages its employees to make worth-while sug- 
gestions along lines that are not strictly confined to one's immediate job. 
And one is proud when an employee that he has recommended does 
turn out to be a very acceptable addition to the company family. These 
manifestations of pride in work, fellow workers, and the company are 
results of recommended hiring that are well worth cultivating. 

6. Recruitment Practices. During periods of general labor 
scarcity or in connection with scarcity of applicants for specific occupa- 
tions, positive steps of seeking employees must be taken. What may be 
done is discussed in terms of usual factory or office jobs, highly skilled 
jobs, and technical and professional positions. 

a) General-Run Jobs. Industry has taken a particularly active role 
in seeking employees not only in war years but also during the tight 



132 PERSONNEL MANAGEMENT 

labor market of recent years. For example, during a concentrated pro- 
gram of inducing people to enter war work, in the relatively small city 
of New Britain, Connecticut, a total of 2,341 housewives were recruited 
in forty days. A complete campaign was worked out that included news- 
paper advertisements, posters, movie-trailers, and shop-window displays. 
But of unique interest was a house-to-house canvass by women actually 
at war work. 

A plant at Asheville, North Carolina, recruited blind workers for 
such jobs as sorting rough pieces of mica. The blind by touch alone were 
able to do as well as, or better than, those with normal vision who used 
a micrometer. Such discoveries of new uses in industry for the special 
skills of handicapped workers have been made through increased re- 
search in the field. 

A unique way of tapping a labor supply was to inaugurate part-time, 
short-hour, "victory" shifts. A company in South Boston advertised for 
such help and got 2,000 applicants. The applicants held full-time regu- 
lar jobs and came into the war plant from 6:00 to 11:00 P.M. for five 
days a week. Another company in Bridgeport, Connecticut, used such a 
"white-collar" shift to good advantage. 

Along somewhat similar lines was the recruiting of "rush-job," tem- 
porary workers. When a peak load had to be handled, appeals were 
made for regularly employed workers to come in for part-time work. 
One company in Utica, New York, based its advertisements on the 
"Minute Man" and "Paul Revere" idea, with telling effect. 

In some areas intercompany and community exchanges of labor sup- 
ply were carried out. By pooling information regarding projected hiring 
and discharges, it was found in some communities that labor could be 
exchanged in a mutually satisfactory manner. Thus, when a given com- 
pany determined that a certain number of employees with particular 
skills had to be laid off, this was called to the attention of other com- 
panies that were expanding and in need of such skills. Good workers 
were thus assured of relatively steady employment, and the industries of 
the community helped themselves by keeping good workers from mi- 
grating. 

b) Highly Skilled Workers. The foregoing cases also serve to il- 
lustrate methods of recruiting highly skilled workers. Also noteworthy is 
the plan of dividing complicated jobs into relatively simple operations, 
although not a source of labor in itself, as a means of taking advantage 
of available or trainable sources. During the early years of the war when 
the shortage of skilled toolmakers became dangerously acute, many 
companies found it desirable to divide this work into its components. 



SOURCES OF LABOR SUPPLY 133 

Then trainees were assigned to the simple aspects of the toolmaker's job, 
while the craftsman retained the complicated operations himself. Thus 
his specialized talents were utilized to the highest possible degree and 
spread over the largest number of jobs possible. This plan has the de- 
sirable characteristic of making it possible to use lower levels of skilled 
and semiskilled employees, which are numerically larger than the 
highly skilled. 

c) Technical and Professional Positions. Many companies have 
turned to the schools to look for desirable applicants for such positions. 
They send representatives to college campuses to seek the cream of the 
graduating classes. In a few cases the practice has been to offer summer 
employment to outstanding juniors and even sophomores with a view to 
permanent employment later. This practice enables the employer to try 
out the students and thus be in a better position to evaluate their po- 
tentialities. And the students not only gain useful work experience but 
also can better judge the desirability of making a permanent connection. 
Some college-recruitment programs have been extended to the point 
that companies are willing to pay for postgraduate training of students 
in particularly scarce, specialized job areas. In all cases of college recruit- 
ment, it is highly desirable to be very careful in screening candidates. A 
useful suggestion in this connection is the interviewing procedure illus- 
trated in Figure 20 (p. 134) / 

7. Unions. Unions have played, and are likely to play, an increas- 
ing role in the matter of sources of labor supply. In some industries, such 
as the building trades, unions have carried the responsibility of supply- 
ing the employer with skilled employees in adequate numbers. This not 
only has been of real service to employers but has also removed from 
their shoulders the obligation of how to allocate limited amounts of 
work during slack periods. The union has determined the order in which 
available workers are assigned to employers. 

When unions have completely taken over the hiring function, as in 
the case of the "hiring halls" of the maritime industry, this practice has 
been restricted by the Taft-Hartley Act. Such "halls" must not discrimi- 
nate against nonunion members. Many believe that the "hiring hall" is 
perhaps the best way of handling the hiring problem in certain indus- 
tries. 

Where unions do not actively engage in providing employment in- 
formation or service to their members, they invariably take an interest 
in seeing that members laid off are given preference in rehiring. Most 

1 Richard S. Uhrbrock, "Recruiting the College Graduate," American Management 
Association Bulletin, 1953, p. 11. 



134 



PERSONNEL MANAGEMENT 



union contracts contain some reference to the responsibility of the em- 
ployer to rehire former employees, and usually in some order of sen- 
iority. It is more than probable that such clauses will become more de- 
tailed and specific, particularly when contracts are rewritten during 
periods of economic recession. 



FIGURE 20 



COLLEGE RECRUITING 
INTERVIEWING PROCEDURE 



1. APPRAISE >■ 



2. PROBE * 



3. ACT 



r 



1. First impression. 

2. Appearance and manner 

3. Evidence of energy. 

4. Answers to general questions. 

1 



Suspended Judgment 



j 

1. Use "Why," "What," "How," "Where," and 
"When" type questions. 

2. Continue observation of mon. 

3. Estimate suitability for employment. 

4. Note degree of rapport with interviewer. 

s — * — z 



Confirmee/ Decision 



4. CLOSE*-** 



J- 

ACCEPT 



1. Give informa* 
tion about Com- 
pany history, 
products, 
opportunities, 
salary, training 
programs. 

2. Answer 
questions. 



1. Describe next 
steps, such as 
application 
form, test, 
factory visit. 

2. Arrange time 
for next 



1 



REJECT 



1. Maintain good 
public relations, 
but do not 
oversell 

2. Answer 
questions. 



1. Indicate de- 
cision to man. 

2. Avoid specific 
reasons for 
rejection. 

3. If advice is 
asked, refer 
to College 
Placement 
Officer. 



REFER 



1. Cive informa- 
tion about Com- 
pany history, 
products, 
opportunities. 

2. Answer 
questions. 



1. Explain referral 
procedure. 

2. Cive 
application 
blank. 

3. Cive name of 



1_ 



ENCOURAGE 



1. Cive informa- 
tion. 

2. Indicate 
interest in 
further con- 
tacts when 
available. 

3. Answer 
questions. 



1. Suggest ways 
of maintaining 
contacts. 

2. Describe 
summer 
employment 
program. 



— 1 — * ~ ♦ ♦ " 1 — r— 

5. RATE^ ^1 Make notes. Fill out rating form. I 



Prepare to interview next applicant. 



Source: Uhrbrock, op. cit. 



SOURCES OF LABOR SUPPLY 135 

While the participation of unions in the supply of labor has not been 
widespread or along lines of complete service, there is no reason to be- 
lieve that such a trend is not likely to gain strength. As demands for 
better wages and hours find more resistance, the unions are undoubtedly 
going to move in the direction of serving their members in various ways. 
One of these is likely to be that of uncovering employment vacancies 
and counseling members as to how the vacancies may best be filled. 

EFFECT OF LOCATION OF PLANT 

Another tack which is worth taking is that of locating the enterprise 
at a location or locations in which the sources of labor supply are sat- 
isfactory. An interesting example of this is found in the plan of Henry 
Ford to decentralize some of his operations. One of the purposes of this 
plan is to locate operations in small towns where it is possible to take 
advantage of small, but nevertheless excellent, supplies of labor. An- 
other example is found in the plan of Sylvania Electric Products, Inc., to 
decentralize its operations in relatively small- and medium-sized towns 
and cities so that it could, among other things, gain the advantage of 
such labor markets. This company began in 1935 to set its policies upon 
the principle of decentralization so that it was in an excellent position 
to expand along planned lines when World War II broke out. Among 
the advantages found in such operations are the following: 

1. Small-town operations enable the company to tap new sources of labor 
supply. 

2. Citizens of small communities show greater interest in their work, and 
hence do better work. 

3. With this kind of help, fewer rejects are found among parts going into 
final assemblies. 

4. Industrial harmony is best when the plant manager knows each worker by 
his first name, and vice versa. 

5. Small-town workers are less inclined to absent themselves without cause. 

6. Small plants offer greater incentives to maturing workers; hence the com- 
pany is able to develop a more effective executive personnel. 

7. It proved easier, under wartime operating conditions, to transport truck- 
loads of partially finished products from feeder plants to main plants than 
to move trainloads of workers from home towns to distant plants. 2 

EVALUATION OF ALTERNATIVE SOURCES 

A knowledge of available sources of supply should be augmented by 
an evaluation of their relative merits. Some plan should be devised by 
which it is possible to measure how good, or how poor, various sources 

2 L. K. Urquhart, "A Case Study in Decentralization," Factory Management and, 
Maintenance, October, 1945, p. 106. 



136 



PERSONNEL MANAGEMENT 



have proved to be. Some reference has been. made in the foregoing dis- 
cussion regarding the advantages and disadvantages of various sources, 
but such generalized conclusions should in particular cases be checked by 
objective measurements whenever possible. Of course, in every com- 
pany some one person will aways have opinions on the relative value 
of particular sources, but such opinions are not always reliable nor 
available. 

Perhaps the most accurate way, though by no means indisputable, of 
evaluating the effectiveness of sources of labor supply is to run statistical 
correlations. In this manner, it is possible to relate the factor of success 
on the job with the factor of particular sources of supply. A simple illus- 

TABLE 9 
Source of Hiring 





Gate Hiring 


Referred by 

Present 

Employees 


Rehiring of 
Layoffs 


Total 




No. 


% 


No. 


% 


No. 


% 


No. 


% 


January 


27 
15 
12 


71 
60 
70 


5 

4 
2 


13 
16 
12 


6 
6 
3 


16 

24 
18 


38 
25 
17 


100 


February 


100 


March 


100 







TABLE 10 
Personnel Recruitment Practices of 325 Selected Companies, 1947* 



No. 



No 



No. 



No Answer 



No. 



1. Are any new employees furnished by an outside source? 

2. Do you make a general practice of securing applicants 
through the United States Employment Service (State 
Employment Service)? 

a) Do you use this service exclusively? 

V) Do you use this service occasionally? 

c) Do you avoid this service? 

3. Do you make a general practice of securing applicants 
through schools and colleges? 

a) Do you use these sources occasionally? 

f) Do you avoid these sources? 

4. Do you make a general practice of securing applicants 
through private (fee) employment agencies? 

a) Do you use these sources occasionally? 

F) Do you avoid these agencies? 

5. Do you make a general practice of securing new em- 
ployees through labor unions? 

a) Do you use this source occasionally? 

F) Do you avoid this source? 

6. Do you make a general practice of securing applicants 
through your foremen, employees, friends, and other 
miscellaneous sources? 



180 



182 

2 

270 

16 

186 

265 



92 
221 

38 

30 
68 
94 



253 



55.5 



56.0 
0.6 

83.0 
4.8 

57.2 

81.6 

0.0 

28.3 
68.0 
11.7 

9.3 
20.8 
28.9 



77.9 



129 



132 

256 

9 

237 

124 

15 

229 

220 

41 

136 

285 

137 

94 



64 



39.7 



40.6 

78.8 

2.8 

73.0 

38.2 

4.6 

70.5 

67.7 
12.6 
41.8 

87.6 
42.2 
28.9 



19.6 



16 



11 

67 
46 

72 

15 
45 
96 

13 

63 

151 

10 
120 
137 



4.8 



3.4 
20.6 
14.2 

22.2 

4.6 
13.8 
29.5 

4.0 
19.4 
46.5 

3.1 
37.0 
42.2 



2.5 



* Source: W. R. Spriegel and R. F. Wallace, "Recent Trends in Personnel Selection and Induction," Personnel, 
September, 1948, p. 79. 



SOURCES OF LABOR SUPPLY 



137 



tration of how this is done is shown by the study made in one company 
which, among other things, wanted to know how well people from 
various parts of the city in which it was located succeeded on the job. 
The map of the community in question was divided into parts that had 
somewhat common characteristics, for example, purchasing power, na- 
tionalities, and schools. The records of employees selected from these 
areas were then correlated with the degree of job success as measured 
by the plan of employee rating operated by the company. It was found 
that the employees who came from certain areas rated higher than those 
that came from other areas. As a consequence, it was decided to restrict 
hirings to those candidates who came from the areas from which the 
better employees had come in the past. It was recognized that, as a re- 
sult of this policy, a few good employees from the restricted areas would 
be passed up, but it was felt that this loss would be less than that which 
would be incurred by hiring from the low-rated areas. 

A simpler plan of evaluating alternative sources of supply is to use 
such measures as turnover, grievances, and disciplinary action. For ex- 
ample, by classifying turnover data according to the original sources 



TABLE 11 
Survey of Opinions Regarding Agencies of Employment* 

Question 1: How did you get your present j obi 



Private 



Public 



Cor 



All workers questioned : 
City A, 1946 (N = 284), 
City A, 1948 (N = 393) 
City D, 1948 (N = 299) 



Workers using all three agencies: 

City A, 1946 (N = 106) 

City A, 1948 (N = 109) 

City D, 1948 (N = 98) 



18% 

19 

16 



28 
40 
25 



7% 
3 



75% 

72 

76 



62 
52 
69 



Question 2: In your opinion, which offers the best opportunity for getting work, the private em- 
ployment agency, the public employment office, or the employment department of 
companies which hire their own workers? 

No Opinion 



All workers questioned: 
City A, 1946 (N = 261). 
City A, 1948 (N = 394). 
City D, 1948 (N = 299). 



Workers using all three agencies: 

City A, 1946 (N = 102) 

City A, 1948 (N = 104) 

CityD, 1948 (N = 98) 



Private 


Public 


Company 


24% 


7% 


58% 


19 


7 


55 


22 


7 


61 


34 


8 


52 


34 


3 


57 


39 


6 


55 



11% 

19 
10 



* Source: I. G. Nudell and D. G. Patterson, "Attitudes of Clerical Workers toward Three Types of 
Employment Agencies," Personnel, 1950, p. 331. 



138 



PERSONNEL MANAGEMENT 



from which employees came, it is possible to. contrast the relative merits 
of sources of supply. The same result may be obtained by tabulating 

FIGURE 21. Employment Office of a Small Plant 



FILING ROOM 



REST ROOM 






CLERK 



WAITING ROOM 



^N 



EMPLOYMENT 
MANAGER'S OFFICE 



^<^ 



RECORDS ROOM 



INTERVIEWER'S OFFICE 



INTERVIEWER'S OFFICE 



grievances and disciplinary action according to classes of hiring sources. 
Table 9 (p. 136) provides an illustration of such a tabulation. Such 
studies are not conclusive, but they do throw light upon a subject that 
otherwise is beclouded by personal opinions and even prejudices. 

Of interest in the matter of evaluating sources of supply are general 
studies made of recruitment practices and toward selected employment 
agencies. In Table 10 (p. 136) are shown the results of the recruitment 
practices of 325 companies. Examination of this table shows that public 
agencies, private agencies, schools, and recommendations are most 
frequently used to attract candidates. Unions, in this study, were least 
commonly used. On the other hand, in particular geographical areas 
and for some jobs, union sources outweigh all others. 



FIGURE 22. Personnel Layout of a Medium-Sized Company* 




* Source: Cyril T. Tucker, "Three Ways to Lay Out a Personnel Department," Factory Management and 
Maintenance, September, 1943, pp. 154-55. 

























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140 PERSONNEL MANAGEMENT 

Another example of an evaluation study is shown in Table 11 (p. 
137). This summarizes the study of public employment agencies, pri- 
vate employment agencies, and company employment departments. In 
this sample, seekers of employment had better results from company 
employment departments than from public or private agencies. 

LAYOUT AND LOCATION OF EMPLOYMENT OFFICE 

The physical layout and location of the employment office has an in- 
direct, though nonetheless important, effect upon the attraction of suit- 
able candidates. An office with comfortable furnishings and a pleasing 
appearance leaves a favorable impression upon applicants and adds to 
the efficiency of the employing staff. Also, one that is conveniently lo- 
cated is more likely to attract candidates than one that is not so easily 
reached. Indeed, this matter of location has become so important during 
recent years that some unique experiments have been conducted to make 
employment offices more accessible. For example, during World War II, 
the Bell Aircraft Corporation established branch employment offices in 
downtown locations, from which applicants found suitable were taken 
to the plant by station wagon. Other organizations have also employed 
auto trailers as added means of reaching and attracting labor. When the 
labor market is exceedingly tight, recourse to such methods is justifiable, 
though it might prove too expensive as a regular practice. 

The layout and appointments of the employment office require care- 
ful consideration. The main problem here is that the volume of hirings 
varied so widely that it is difficult to arrive at a satisfactory compromise 
as to size. Usually, the employment office is too large or too small. Some 
examples of office layouts are shown in Figures 21, 22, and 23 (pp. 
138 and 139). It will be noted that all of the plans are designed to 
facilitate an efficient flow of applicants through the hiring process. The 
plan of the Aluminum Company of America is particularly to the point. 



QUESTIONS AND PROBLEMS 

1. What are the arguments, pro and con, regarding the "hiring hall"? 

2. Under what conditions is the contention true that "a work test is the best 
test" for candidates for employment? In a rapidly expanding company, 
would you rely upon this principle? Explain. 

3. What are the chief weaknesses of the internal source of supply? Do these 
weaknesses apply generally, or only to specific classes of jobs? 

4. What conditions must be met for favorable usage of the internal source of 
supply? 



SOURCES OF LABOR SUPPLY 141 

5. How would you go about determining whether or not a policy of promoting 
from within had had a favorable effect upon employee morale? 

6. What are the major external sources of labor supply? How would their 
effectiveness vary as business conditions change? 

7. Explain the growing importance of the federal and state employment serv- 
ices. Do you believe that these agencies will maintain their important posi- 
tions as a source of labor? Explain. 

8. Private employment agencies have in recent years grown in prestige. How 
would you explain this trend? 

9. Examine the classified advertising section of a newspaper carrying a repre- 
sentative number of labor want ads. Write a report describing good and 
poor practices of advertising for labor. Illustrate your report with examples. 

10. How would you determine the value, or lack of it, of casual applicants as a 
source of labor supply? Under what conditions would reliance upon it be 
justified? 

11. Justify the favor in which many employers hold recommendations of present 
employees as a source of labor supply. 

12. Describe the plan of intercompany and community exchanges of labor sup- 
ply. Indicate some of the problems that must be solved and policies that 
must be agreed upon before these plans can be adopted effectively. 

13. If you were asked to establish a plan for a house-to-house canvass of labor 
candidates, what instructions would you specify for canvassers? How and 
where would you select your canvassers? 

14. If women were used so widely in industry during the war years, why do 
not such sources as housewives constitute a relatively cheap source of labor 
supply at present? 

15. Make a list of types of handicapped workers who could provide an accept- 
able source of labor supply. Is the hiring of such candidates a matter of 
charity or of sound business? Give examples. 

16. How can the plan of dividing technical jobs into components of varying 
degrees of complexity help solve the problem of locating candidates for 
employment? 

17. Draw up a table comparing the small, medium-sized, and large city as 
sources of labor supply. Indicate the shortcomings as well as advantages of 
each. 

18. How can the relative merits of alternative sources of labor supply be meas- 
ured objectively? Need such measurements always consist of involved mathe- 
matical analyses? Explain. 

19. What values can a good physical location and layout of an employment 
office contribute to the matter of sources of labor supply? 

20. Visit a company and draw a floor plan of their employment office. Indicate 
how the applicants "flow through" the hiring procedure. Also, note the loca- 
tion of the office with reference to the factory, general office, or sales activi- 
ties of the company in question. Support your plan with a critical analysis. 



CHAPTER 



8 



The Selection Procedure 



MAJOR STAGES 

The "selection procedure" is the sequence of functions adopted in a 
given case for the purpose of ascertaining whether or not candidates 
possess the qualifications called for by a specific job. In some cases the 
qualifications of a progression of jobs are considered when promotional 
possibilities are of importance. As noted in earlier chapters, the selection 
or "hiring" procedure cannot be effectively placed in operation until 
three major steps have been taken — 

1. Requirements of the job to be filled have been specified. 

2. Qualifications workers must possess have been specified. 

3. Candidates for screening have been recruited. 

After the foregoing steps have been taken, it is then the purpose of se- 
lection to match the qualifications of candidates with the requirements 
of the job. Undesirable candidates are "screened" out and the qualified 
retained. 

Selection (also termed "screening" or "hiring") processes of com- 
panies differ widely. Some companies are content with a cursory per- 
sonal interview and a simple physical examination. At the other ex- 
treme, elaborate series of tests, examinations, interviews, and appraisals 
are employed. The order of arrangement of functions also differs — some 
companies give physical examinations, for example, early in the pro- 
cedure, whereas others place this step toward the end of the procedure. 

Although there are numerous differences in how this task is per- 
formed, all selection procedures have common features. The following 
broad steps are generally taken: 

1. Initiation of the selection process 

2. Gathering pertinent information about candidates 

3. Interpreting findings and comparing with job requirements 

4. Making decisions and recording results 

5. Induction or placement of employee 

142 



THE SELECTION PROCEDURE 



143 



INITIATION OF SELECTION PROCEDURE 

The selection process is placed in operation by means of a release of 
authority to fill an existing or expected vacancy. How such authority 
is released, by whom, and to whom differs from company to company. 
In its simplest form, where the company is small and the line form of 
organization structure is in use, each executive decides for himself when 
vacancies should be filled. Such instances represent informal and per- 
sonalized management, which is beyond the possibility of study here. 

As an organization grows, release of authority is clothed in formal- 
ized records and systems. Very common in such instances is the use of 
a form called the "hiring requisition," issued to the employment office 
by the executive in need of help. Regarding the question of who may 
issue such requisitions, practice differs. Some companies permit first-line 
foremen and supervisors to issue them for any vacancies that occur. 
Other companies grant this right to supervisors in regard to direct help, 
such as machine operators, but require higher approval in the case of in- 
direct or so-called "nonproductive" help, such as truckers, messengers, 
and clerks. Still other companies require all requisitions made out by 
foremen and supervisors to carry the signatures of higher executives. 
The purpose of such requirements is to control more closely the number 
of hirings and thus reduce the possibility of needless employment. 

Hiring or labor requisitions differ in the kind and amount of infor- 
mation which they carry. The form shown in Figure 24 is illustrative 



FIGURE 24. An Employment Requisition 

EMPLOYMENT REQUISITION 



(FOREMAN KEEP DUPLICATE - COLORED COPY) 



TO EMPLC 
PLEASE EK 


)YMENT MANAGER:— 
1PLOY FOR 








DATE... 194... 

DEPARTMENT THE FOLLOWING: 






«1!« 


riM»'ut 


OCCUPATION 


■ AT. 


""porcs 


D TO REPLACE (NAME OF EX. EMPLOYEE) 
D FOREMAN* RECOMMENDATION 


«""<, 


<D "r"\" , 


• 


















a 


















• 


















4 


















SIG 


NED .-.-.-=-. ... ., APPROVED. 


foreman •uramnrcHmirr 
TO BE FILLED OUT BY EMPLOYMENT MANAGER 


EMPLOYED (NAME) 


CLOCK NO. 


STATUS (SEE NOTE BELOW) 


DATE HIRED 


1 










a 










a 










4 











* HOTI .JSE THESE DESCRIPTIONS! REPLACEMENT. ADDITION, TEMPORARY. 

PART TIME, (EASONAL, STUDENT (MINOR), APPRENTICE, EXTRA OR CASUAL 



RECEIVED BY 
OATE 



144 



PERSONNEL MANAGEMENT 



of a simple means of informing the employment section that a vacancy 
exists. Under conditions in which the employment office is personally 
acquainted with the job in question and the needs of the various de- 
partments, as is true in smaller companies, such a form serves the pur- 
pose of initiating the selection process. In cases where such information 
is not personally known by the employment officer or his assistants, 
which would be true in large organizations, a more detailed statement 
is needed on the labor requisition, as illustrated in Figure 25. Here the 

FIGURE 25. An Employment Requisition 



EMPLOYMENT REQUISITION 



NUMBER REQUIRED 



OATE OF REQUEST 



DEPARTMENT 



DUTIES AND RESPONSIBILITIES 



TEMPORARY 



REPLACEMENT 



PERMANENT 



TEMPORARY 



MAXIMUM 



EDUCATION REQUIRED 



EXPERIENCE 



rEARS DESIRED 



YEARS DESIRED 



TECHNICAL 



CLERICAL 



MECHANICAL 



STENOGRAPHIC 



SPECIAL 



LOCATION 



REQUESTED BY 



APPROVED Bl 



DEPARTMENT 



• NOTE- TYPE IN OUPLICATE. ORIGINAL TO PERSONNEL DEPT. DUPLICATE FOR YOUR FILE.) 

PLEASE ANTICIPATE YOUR WANTS AS FAR IN AOVANCE AS IS POSSIBLE AND GIVE SUFFICIENT DETAILS SO THAT 
THE PERSONNEL DEPARTMENT CAN MAKE AN INTELLIGENT SELECTION OF APPLICANTS. 

TELEPHONE REQUESTS MUST BE COVERED BY A WRITTEN REQUISITION WITHOUT DELAY. 



THE SELECTION PROCEDURE 145 

specifications are stated in coded as well as descriptive terms, so that 
reference may be made quickly to more complete specifications of job 
and personnel requirements. 

As requisitions are received, they may be recorded in a labor journal 
or register, so that the status of unfilled requisitions may readily be ascer- 
tained and controlled. Employment requisitions are then assigned to em- 
ployment assistants, who acquaint themselves with job and labor speci- 
fications and thus prepare themselves to check on available candidates. 

GATHERING INFORMATION ABOUT CANDIDATES 

1. Information Sought. A variety of information may be gath- 
ered from and about candidates for vacancies. The efforts exerted in 
gathering such information may be studied in terms of ( 1 ) the informa- 
tion which is sought and ( 2 ) the means of deriving desired information. 
In the first of these divisions, the general classes of information include 
the following: 

1. Training, experience, and general background 

2. Mental ability and level of intelligence 

3. Physical condition, aptitudes, and skills 

4. Moral and emotional characteristics and skills 

Under the second of these divisions, the general groups of means of 
gathering information include the following: 

1. Interviews 

2. Tests and examinations 

3. Personal observation 

4. Application blanks, references, and similar reports 

5. Union sources 

In the present section, the discussion will be restricted to application 
blanks, references, personal observation, and union sources, inasmuch as 
the use of tests, examinations, and interviews for collecting desired in- 
formation is treated more thoroughly in the next few chapters. 

a) The Application Blank. The application blank is undoubtedly 
one of the most common tools of selection. It invariably occupies a lead- 
ing role because information gathered in this manner provides a clue to 
the need of and a basis for other selective processes. Its design differs 
widely from company to company, but the following general classes of 
information are sought in practically all cases: 

1. Identifying information, such as name, address, telephone number, and 
social security number 

2. Personal information, such as marital status, dependents, age, place of 
birth, birthplace of parents, number of sisters and brothers, etc. 



146 PERSONNEL MANAGEMENT 

3. Physical characteristics, such as height, weight, health, defects 

4. Education 

5. Experience, usually through the last three or four employers only 

6. References, personal and business 

7. Miscellaneous remarks and comments, such as hobbies, memberships in 
organizations, financial status, and insurance programs 

Details included under the foregoing headings may be noted by a study 
of the form illustrated in Figure 31 (p. 155). 

In determining what information is to be asked for on an application 
blank, it is invariably necessary to reach a compromise between what is 
wanted and needful and what can be obtained effectively on such a form. 
Applicants are not always willing to give answers (particularly when 
they are not sure of being hired) to such questions as financial status or 
details of personal history. Moreover, detailed application blanks may 
drive applicants away, particularly during conditions of a tight labor 
supply. 

As a consequence, it is necessary to decide how much information 
can reasonably be asked for on the applicant blank. A particularly useful 
test in this connection is: How needful is the information to the com- 
pany? When this question is answered squarely, it will be found that 
some information sought on application blanks is used so infrequently 
that it does not merit a place on the application blank. When informa- 
tion is needed only in isolated cases, it is well to seek it by other means, 
such as the interview or by references. 

There is good reason to doubt the wisdom of placing too much con- 
fidence in the application blank as an unsupported source of hiring de- 
cisions. For example, what does it really prove to find out from an appli- 
cant that he graduated from high school? How standards differ from 
school to school, how a student applies himself to school work, the value 
of various extracurricular activities, and motivational factors during 
school life are not disclosed by the application blank. Similar questions 
could be raised about other "information" on the blank, such as work ex- 
periences, hobbies, family obligations, and living-quarters arrangements. 
If the bare record will not serve to rank or grade applicants, weighting 
the information on the blank — as some have suggested — cannot add 
something to nothing. The real usefulness of the blank must come else- 
where; it can provide the basis for reference checking, good interview- 
ing, and correlation with testing data. In and of itself, the application 
blank has little discriminating value as between various candidates. 

Another aspect to which attention must be directed in this connec- 
tion is the design and form of the application blank. On the one hand, 



THE SELECTION PROCEDURE 147 

it must be considered from the viewpoint of the applicant. It should be 
designed to provide needed information easily and quickly. In this con- 
nection the use of such devices as the following have been found help- 
ful: grouping similar questions in adjacent blocks of space; using "yes" 
and "no" questions, as well as questions that can be checked, whenever 
possible; and using legible print. On the other hand, it must be designed 
with the company's purpose in mind. It should be relatively easy to han- 
dle in the employment office. This calls for consideration of such matters 
as ease of filing, durability throughout frequent handling, and promi- 
nence of most pertinent information. In addition, it may be desirable to 
adopt two or more types of blanks so that they will fit the various classes 
of personnel to be selected, for example, general factory employees, gen- 
eral office employees, and executive and technical employees. 

b) Use of References. The use of references is also common to 
most selection procedures. This practice places reliance upon the evalua- 
tion of former employers, friends, and professional acquaintances. In- 
asmuch as most people are reluctant to make reports that may hinder the 
chances of others, their opinions are not likely to result in accurate ap- 
praisals unless carefully controlled. For example, when a personnel 
officer seeking information knows and has the confidence of another 
personnel officer whose company has been given as a former employer; 
then reliance can be placed upon the reference. In localities in which as- 
sociations of personnel executives have been formed, bringing those ex- 
ecutives into a position of closer acquaintanceship, it has been found that 
the degree of reliance that can be placed tends to go up sharply. Or if a 
reference form, such as that shown in Figure 26 (p. 148), is used, 
which requires definite appraisals, the chances of getting unbiased ref- 
erences are increased. Moreover, the number of returns is increased; in 
the case of the cited form, it is reported that 88 per cent of the inquiries 
made by this method were returned, most of them promptly 

The usefulness of references is also dependent upon the speed with 
which they can be checked. During times when the need of labor is 
great, decisions may have to be made about candidates very quickly. In 
urgent cases, the telephone and the telegraph are employed. 

c) Personal Observation. Despite the increased use of various types 
of formal tests and despite the high probabilities of error due to personal 
prejudice or ineffectiveness, personal observation is undoubtedly widely 
used and weighs heavily in reaching decisions in the selection process. 
There is no reason why this method of gathering information should not 
be employed so long as it is practiced with due consideration for its pos- 
sible weaknesses and is supplemented by other aids. Certainly, interview- 



148 PERSONNEL MANAGEMENT 

ing, which essentially is a form of personal observation, has been cred- 
ited with a higher role in selection since its operations have been studied 
more scientifically in recent years. 

Indeed, interviewing is proving such a useful tool that its principles 
are worthy of description, which is the subject of a later chapter. In any 
event, much useful information can be obtained by talking to and sizing 

FIGURE 26. A Sample Reference Form* 



Social Security No. 



has applied to us for a position as Applicant claims to 

have been in your employ from to Having 

had an opportunity to observe above applicant as an employee, your frank answers 
to the questions on the reverse side of this card will be valuable to us, and would 
be greatly appreciated. We assure you that your replies will not be revealed, to the 
applicant, or anyone else, under any circumstances. 



(Reverse) 

1. When was he in your employ? From 

2. What position did he hold? 



3. Was his attendance regular? Yes No If not, what was the cause 

of his absences? 

4. Was he liked by his co-workers (well-liked, acceptable, sometimes criticized)? 



5. Was his rate of progress slow, average, above average?. 

6. Was he asked to resign, or did he resign voluntarily? 



7. Would you re-employ for a similar position? Yes No_ 

If not, why? 



8. In view of your knowledge of his character, ability, and dependability, how 

would you rate him as an employee? Below average Average 

Above average 

9- If you prefer, we will call you on telephone No . 



* Source: C W. Brooks, "Checking Applicants' References," Management Review, September, 1948, p. 465. 

up candidates; hence it would be unwise to forego its inclusion in the 
selection process simply because it can be easily misused. .After all, any 
tool can be mishandled; the moral is that users should be properly 
trained to use such tools. 

d) Union Sources. Information may also be obtained from local 
union offices regarding the preference to be given candidates. Indeed, in 
some instances, as noted earlier, the "union hall" would be the first and 
perhaps the only source of supply of labor. In such cases the union would 
pretty largely sift out the candidates for employment. And it seems prob- 
able that, as time goes on, the union office is likely to take a greater in- 



THE SELECTION PROCEDURE 149 

terest in who among their members is hired, in their competency to hold 
jobs, and in the company's tests of selection. As this trend builds 
strength, the company may find it desirable to work out agreements on 
standards of employment which go beyond technical questions of sen- 
iority or order of rehiring. 

2. Interpreting Findings. The next major step in the selection 
process is to interpret findings and make decisions. Of course, this is a 
phase of selection that takes place at all stages of the process. Inasmuch 
as the selection process is also a rejection process, some candidates will 
fall by the wayside after each step. Some candidates may be rejected be- 
fore they are even permitted to fill out an application blank, others will 
be rejected because of information received on the application blank, 
and still others will not fail until a final survey of all evidence is made. 

This task of separating acceptable from nonacceptable candidates is 
very difficult, particularly in "twilight" cases and in cases where the 
candidates succeed in passing the preliminary hurdles. Let us assume that 
on a test used in connection with a particular job, the minimum passing 
grade is 75, and that on it a candidate gets 74. What should be done if 
his personal qualities are satisfactory and so are his training, experience, 
and references? The tendency is to accept the candidate in such instances 
in spite of the test score. But what if the test score is 73 or 72 or 71 or 
70? When does the weight of the test outbalance the other factors? Most 
companies leave this to the personal judgment of the employment officer 
or to his superior in important cases. Some companies are attempting to 
place this on an objective basis by using a report form on which the 
various findings are summarized and scored. 

REPORTS AND RECORDS 

1. Rejections. As decisions are reached regarding applicants, it is 
necessary to make out reports and records. These records may be classi- 
fied according to whether the candidates are rejected, are not hired but 
would be desirable employees if vacancies were available, or are hired. 

Keeping records of candidates not hired may seem a useless gesture, 
but it is not necessarily so. In the first place, if considerable study has 
been made of a candidate and he is found unsuitable, records of the case 
will prevent a restudy if the applicant should later present himself again, 
as sometimes happens. 

For example, an applicant was refused a job in one company because 
his educational background indicated that he was unsuited for the job. 
The applicant returned a few days later and gave a new set of educa- 
tional data, having deduced from the interview that the educational 



150 PERSONNEL MANAGEMENT 

factor had stood in his way. Only the fact that the interviewer happened 
to remember the case (no file of unsuccessful candidates was main- 
tained) prevented the man from being hired. Since microfilming has 
come into use, such records can be kept in a minimum of space. Figure 
21 illustrates a record of rejected candidates. 

In the second place, a record of reasons for rejection is highly desir- 
able in cases in which a company might be accused of unfair labor prac- 
tices. This factor grows in importance as rules governing fair employ- 

FIGURE 27. Acceptance or Rejection Form 





NOTICE OF 


ACCEPTANCE 


or 


REJECTION OF APPLICATION FOR 


EMPLOYMENT 




TO 


SAMUEL MARKUM 






OE P T . 

HEAD 


PAUL SMITH 


OAT 


F 


10-1 


, 1946 






THIS IS TO 


ADV 


ise voo 


THAT THE APPLICATION OF: 












JOHN DOE 






ADDRESS 


1754 South Sixth St. 






phone Wa. 


2046 


mas ei[ 


ACCEPTED *JCdkW*JUC 
N f OR EMPLOY 
bXXgtCTO PERMANENT 


UENT 




^t^ ACCEPTED • DATE S 


ARTS 


TO 


«ork 10-5 


-46 


If DC Jl 


CTfO - GIVI REASONS 


f OB REJECT ION 
















THIS 


GOES TO FOREMAN 


AT TIME OF INTERVIEW aND 


MUST BE c :mpleted and returned 


TO 






SUPERINTENDENT'S DESK 


FOE REVIEW. 
















(THIS 

DIRECT 


ORM TO 6E SIGNED AN 
TO SUPER INTENOENT " 


RETURNED 
DESK ) 














Foreman 











ment practices become formalized in state laws, as is true in the state of 
New York. 

Practically all companies maintain a file of information on candi- 
dates who would make desirable employees if vacancies existed. This is 
a desirable practice, inasmuch as such people, having undergone some 
investigation, constitute a possible source of labor supply. The useful- 
ness of such a file depends upon the economic position of the industrial 
and business community. During the war, for example, applications filed 
by candidates were usually found to be useless as a source of supply un- 
less followed up within a day or two. There were too many jobs avail- 
able for people to wait for one with a particular company. On the other 
hand, during depression years, applications were found useful even after 
months had passed. 



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THE SELECTION PROCEDURE 



153 



FIGURE 29 




Kardex equipment makes personnel records available quickly at point of use* 




Supporting papers are kept in insulated files for reference when needed 

* Source: Robert D.Johnson, "Personnel Files," Systems, July-August, 1954, p. 8. Reproduced by permission. 
Courtesy of Remington Rand. 



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THE SELECTION PROCEDURE 



155 



2. Records of Hired Employees. As to candidates who are 
hired, the systems of recording fall into two major groups. On the one 
hand, some companies establish a folder for each employee and place 
in it all hiring information. Into it is filed all additional data, such as 
service or merit ratings, job and rate changes, grievances and disciplinary 
cases, and any added educational accomplishments. The folders are filed 
alphabetically (but usually first by major divisions of the company) . 

On the other hand, some companies compile, in addition to the 
folder, a card recapitulating important information in the folder. The 
card is filed separately from the folder and becomes the working source 
of information about employees. Figure 28 (pp. 151 and 152) il- 
lustrates such a card. This system of duplicating information makes 
available in ready and handy form pertinent data about employees. In 
addition, the folder with its valuable information need not be disturbed 

FIGURE 31. A Personnel Tabulating Card* 



W 



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* Source: "I.B.M. Accounting," The International Business Machine Corporation. 

unless detailed or complete facts are necessary. Besides, thumbing 
through a folder takes more time than scanning a summary card. How- 
ever, this plan is more costly, since there is the clerical expense of com- 
piling and maintaining the card in addition to that of filing material in 
the folder. Tabulating cards used for this purpose are illustrated in Fig- 
ures 30 and 31. The former are sorted manually and the latter by ma- 
chine. 

Whether the form of tabulating card system should be used depends 
upon the value of the extra service received from it as compared 
to the cost. Such records are commonly called "personnel service rec- 
ords" or "personal history cards." 

Careful planning of personnel records will make it possible to main- 
tain them at minimum expense. It is reported, for example, that in one 











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160 PERSONNEL MANAGEMENT 

case the personnel records of nine hundred employees are kept by one 
clerk. 1 Another interesting example of a personnel record for a smaller 
company is the multipurpose form illustrated in Figure 32 (pp. 156— 
59). 2 It may be used in the following ways: 

1. Application blank (pp. 1 and 2) 

2. Interview rating, test record, and reference check-up (p. 3) 

3. Basic payroll record (pp. 3 and 4) 

4. Medical examination form (p. 4) 

5. Record of other personnel data, such as attendance, salary or job changes, 
and efficiency rating (p. 4) 

INDUCTION OF NEW EMPLOYEE 

The final step in the selection process is that of inducting the new 
employee into his new surroundings and placing him on his new job. 
In many companies this stage of an employee's tenure is handled very 
superficially. But there is a strong movement in the direction of han- 
dling this stage with great care because the first days on a job are recog- 
nized as being critical in the employment life. This conviction stems 
from the realization that a new employee is uncertain, critical, and in- 
secure; hence he is much more aware of his surroundings. Impressions 
are consequently made that will remain for a long time if the employee 
stays. Or the impressions may cause him to quit. And it is generally true 
that turnover among new employees is higher than among workers with 
greater seniority. 

The stage of induction should take into account two major aspects: 
( 1 ) acquainting the new employee with his new surroundings and its 
rules and regulations, and (2) indoctrinating him in the "philosophy" 
of the company and its reasons for existence. More companies build 
their programs around the first of these aspects than the second. Never- 
theless, an appreciation for the importance of indoctrination is growing. 

1. Getting Acquainted. In acquainting the new employee with 
his new surroundings and company regulations, practice tends toward 
giving introductory materials and instructions away from the working 
center. Either a "classroom" lecture, a movie, or a group conference is 
used by a member of the personnel department. In any event, such sub- 
jects as the following are covered: 

1. Company history, products, and major operations 

2. General company policies and regulations 

1 R. D. McMillen, "Personnel Records," Factory Management and Maintenance, 
June, 1947, p. 109. 

2 J. S. Kornreich, "Personnel Records for the Small Company," Personnel, March, 
1953, pp. 431-36. 



THE SELECTION PROCEDURE 161 

3. Relation of foremen and personnel department 

4. Rules and regulations regarding 

a) Wages and wage payment 

b ) Hours of work and overtime 

c) Safety and accidents 

d) Holidays and vacations 

e) Methods of reporting tardiness and absences 
/) Discipline and grievances 

g) Uniforms and clothing 

h ) Parking 

i) Badges and parcels 

5. Economic and recreational services available 

a) Insurance plans available 

b ) Pensions 

c) Athletic and social activities 

6. Opportunities 

a) Promotion and transfer 

b) Job stabilization 

c) Suggestion systems 

It is ordinarily not expected that much of the foregoing will "stick" in 
the minds of the inductee, but this preliminary step does serve to prove 
that the company is taking a sincere interest in getting him off to a good 
start. Moreover, a permanent record of the materials seen and heard is 
provided by supplying him with a booklet of rules and regulations and 
other materials illustrating company history, products, etc. Then, too, 
such off-the-job sessions may be continued occasionally after the new 
employee does settle down on his job. In this way, the theory of repeti- 
tion is brought into play. 

After preliminary sessions in the personnel department, the new 
employee is conducted to his working center. At one time, the employee 
was given oral instructions and left to find his way himself, and some 
companies still use this system. Better practice, however, is to have either 
a representative of the personnel department act as a guide or someone 
from the operating department come over and take the new employee 
in hand. 

Upon arriving at the assigned department, the inductee is introduced 
to his foreman and fellow workers. Some foremen turn over the new 
employee to a 'lead" man, 'gang boss," or departmental trainer. This 
individual instructs the employee on such matters as to how to "ring" 
in and out, where the lockers are, departmental rules, and how his job 
is to be done. He also follows up on the employee from time to time to 



162 PERSONNEL MANAGEMENT 

see whether a satisfactory adjustment is being made and whether or not 
the employee has any questions or problems. 

There is a growing trend, however, to have the foreman or super- 
visor handle this stage of induction. The trend is based on the recog- 
nition that, if management is to gain the loyalty of employees, it must 
take the time to work with employees. Time and again, employees have 
been hired without more than a cursory acquaintance with the foreman. 
Little wonder that they turn to union stewards who make a concerted 
effort to prove they are the real friends of the employee. When the 
foreman takes the necessary effort to handle induction, he proves at a 
critical time his desire to build a friendly and co-operative relationship. 

After an employee has been "placed" on his job, good induction 
practice also involves periodic follow-up. Either by reports or, better, by 
personal visits from the supervisor or representative of the personnel 
department, the status of the new employee is ascertained after a period 
of thirty or sixty days, and thereafter for another equivalent period or 
two. In this way, it is possible to check to see whether the employee has 
been properly placed, whether the promises the company made to him 
have been kept, and whether any problems have arisen that require 
solution. 

2. Indoctrination. The induction stage provides an excellent 
opportunity to develop attitudes of new employees toward their new em- 
ployment and surroundings. The mind of the new employee is more 
open to suggestion and change than it perhaps will be again during his 
tenure with the company. Hence more and more companies are taking 
advantage of this opportunity to sell their "philosophies," the whys and 
wherefores of the private-enterprise system and capitalism, the need for 
productivity, and the reasons why they operate as they do. 

Since modern employees are no longer satisfied with just a job but 
want to know why things are as they are, this phase of induction is both 
needed and commendable. It is useless for a company to complain that 
its employees "really don't know its problems," if it does nothing to 
discuss, explain, and talk about them. The opportunity to present its 
views to new employees should therefore not be overlooked. The in- 
ductee wants to know "what all the shooting is about." Of course, if 
the company presents a distorted or selfish picture, such action is not 
condoned and is bound to boomerang. But, with a good story honestly 
told, the company has much to gain and nothing to lose. 

Such indoctrination is a job for the personnel department and the 
supervisor. In the very first sessions conducted by the personnel depart- 
ment, discussions of technical rules and practices should be sprinkled 



THE SELECTION PROCEDURE 163 

with explanations of company activities and suggestions on the role the 
company plays in our economic, political, and social system. Such in- 
doctrination should also be included in any printed or visual-audio ma- 
terials that are used. 

When the employee reaches his new department, the supervisor or 
"lead" man should continue the indoctrination program. To do this, the 
supervisor himself will have to be thoroughly grounded in company 
philosophy and theory. Special lectures or conferences should be pro- 
vided for this purpose, so that the supervisor can better explain what 
the company is trying to do and why. 

Perhaps the essence of indoctrination is to convince the employee *^ 
that, in the last analysis, what is good for the company and our eco- 
nomic system is best for the employee. This may seem to appeal to 
selfish self-interest; but, if it is true, then there is no reason for con- 
demnation. If the system is serving only the best interests of the em- 
ployer, then the indoctrination is built on sand. But it is abundantly 
evident that such indoctrination does have the advantage of advancing 
the best interests of both employer and employee. Hence it seems the 
better part of wisdom that the employer indoctrinate when he inducts 
new employees. 

Moreover, such indoctrination has a large element in it of good pub- 
lic relations. If an employee is convinced that he is working for a good 
company and a good cause and has the arguments to prove his convic- 
tions, he is one of the best channels by which the public is also con- 
vinced of the merit of the company and the cause. There is little doubt 
that good public relations begins in the factory and office; and there the 
best beginning is indoctrination of new employees. 

SUMMARY 

By way of summary, some suggestions are in order regarding the 
characteristics that must be built into a selection procedure. Of course, 
the essential feature of a selection procedure is that it produces results 
effectively and economically. To do this, each step in the selection se- 
quence must be assigned a place so that it may contribute its fullest 
share to the final result. Moreover, each step or phase of the selection 
procedure must be equipped and manned to a degree commensurate 
with its importance. For each step, too, it is necessary to establish, first, 
standards of performance and, then, means of allocating and determin- 
ing responsibility for results. In designing the procedure, care should be 
taken to make it reasonably flexible, on the one hand, so that it can 
manage effectively temporary changes in volume and, on the other hand, 



164 PERSONNEL MANAGEMENT 

to make k sufficiently stable so that it is not subject to whimsical 
changes. The selection process should have definitely established starting 
and finishing points, so that unauthorized or dangling procedures will 
not be in operation. And, finally, each step should give due considera- 
tion to cost, time taken, tradition, and legal requirements. These sug- 
gestions, in general form, apply to any procedure and hence possess a 
universal usefulness. 



QUESTIONS AND PROBLEMS 

1. Define the term "selection procedure." How does this differ from selection 
functions? 

2. What tests would you apply in order to determine whether or not a specific 
selection procedure is a good one? Visit a local employment office and find 
out what their hiring procedure is. Afterward, apply your tests to the pro- 
cedure in question. 

3. Compare the selection procedure of small, medium-sized, and large com- 
panies. What are the essential differences between the procedures of these 
classes? 

4. Why is the physical examination usually placed toward the end of the 
selection procedure? 

5. As an employer, why might you ask the following questions on an applica- 
tion blank: How much salary do you expect? What are your hobbies? 

6. What classes of information are ordinarily sought from candidates for em- 
ployment? By what methods is the information sought? 

7. List the major classes of information usually asked for on an application 
blank. Justify the types of questions asked. 

8. What characteristics should be sought in designing the form of an applica- 
tion blank? 

9- How much confidence can be placed in the average reference letter? What 
practices can be followed in order to increase the usefulness of references? 

10. Why is personal observation a widely used method of gathering information 
about candidates? Does the reliability of this method justify its wide use? 

11. Write a brief report on the advantages, disadvantages, and conditions of 
most favorable use of microfilming. 

12. What effect do fair employment practice laws have upon the design of 
hiring records and forms? 

13. What factors determine how long application blanks of candidates who are 
not immediately hired should be kept on file? 

14. What systems are commonly in use for recording and filing information 
on candidates who are hired? Under what conditions would you recommend 
the use of each? 

15. Why is the induction of new employees such an important function? Note 
some of the reasons why new employees are "critical." 



THE SELECTION PROCEDURE 165 

16. What are the advantages and disadvantages of using movies in the induction 
process? 

17. Upon whom, and why, would you place the greatest burden for the induc- 
tion of new employees? 

18. Of what value, and why, are tours through the factory and office as an in- 
duction device? 

19. Of what value are postinduction interviews? 

20. What relation should exist between line departments and the personnel de- 
partment in the selection procedure? 



CHAPTER 



9 



Interviewing and Counseling 



THE ROLE OF INTERVIEWING AND COUNSELING 

The interview is one of the most commonly used methods of seeking to 
derive information from job applicants. It is a face-to-face, question- 
and-answer, observational, and personal appraisal method of evaluating 
the applicant. Usually, it is more than a means of getting information. 
It also involves, first, giving information that will help the applicant 
make up his mind about the company and, second, giving advice or 
suggestions that may serve to change the attitude, mental or emotional, 
of the interviewee. Hence there usually is an element of counseling 
in interviewing, although there is a tendency to try to keep the purposes 
of the two somewhat separate and distinct. 

The subjects of interviewing and counseling are taken up at this 
point because they are of significance in the procedure of hiring. How- 
ever, these techniques are also of significant importance in handling 
grievances, taking disciplinary action, vocational guidance, handling 
employees being separated from the payroll, assisting employees with 
personal problems, handling transfers and promotions, and training ses- 
sions. Hence, the discussion here is intended to serve not only the needs 
of the employment procedure but also those of the activities just noted. 
And the examples and practices taken up here may be related to employ- 
ment, but the basic principles are also pertinent to other uses of inter- 
viewing, counseling, and guidance. 

These tools are more involved than many believe. Indeed, interview- 
ing was for a long time considered to be an unreliable tool for employ- 
ment purposes. This conclusion was reached after various studies had 
been made of selected executives who were asked to interview and then 
rate groups of candidates. Insignificant correlations were found when 
work success or failure was compared with the ratings. But later studies 
showed that the apparent ineffectiveness of interviewing was really the 
fault of the interviewers; they may have been good executives, but their 
interviewing techniques were hit or miss and almost entirely the "by- 

166 



INTERVIEWING AND COUNSELING 167 

ear" type. Later studies have shown that careful interviewing and 
counseling can be a most effective tool. 

To be effective, close attention must be paid to the development of 
techniques based upon good principles and applied by skilled person- 
nel. What these principles and skills are may be seen by examining 
interviewing under the following headings: 

1. Methods of interviewing and counseling 

2. Rules of good interviewing 

3. Recording results of interviewing and counseling 

4. Evaluating results of interviewing and counseling 

5. Selection and training of interviewers 

METHODS OF INTERVIEWING AND COUNSELING 

In actual practice there are undoubtedly as many methods of inter- 
viewing as there are interviewers. By and large, most interviewing has 
been unplanned and unskilled. In such cases, the interviewer may have 
some notion of the information he desires or the purpose he hopes to 
accomplish. Beyond that he relies upon "spur-of-the-moment" questions 
or insight to guide the actual interview. As might be expected, such 
practices are not very successful; nor do they serve to contribute to a 
student's understanding of good principles and practices of interviewing. 
Much more can be learned from study of the following methods: 

1. The planned interview 

2. The patterned interview 

3. The nondirective interview 

1 . Planned Interviews. Without going to the extent of the pat- 
terned interview, which is discussed next, many interviewers have im- 
proved themselves by following definite plans of action. Before enter- 
ing into the actual interview, they work out in their minds, if not on 
paper, what they hope to accomplish, what kinds of information they 
are to seek or give, how they will conduct the interview, and how much 
time they will allot to it. During the interview, deviations from the plan 
may be made; but, when the interviewer deviates, he does so with the 
knowledge of what he is doing and how far off he is from his intended 
track. Although there is some formality about such plans, flexibility is 
one of its major advantages. 

Such interviews are within the capacities of almost any executive or 
personnel staff member. They are based upon the simple proposition 
that it is well to give some thought to how he will conduct himself 
before actually talking to a candidate or an employee. When this is 



168 PERSONNEL MANAGEMENT 

done, the actual task of getting or giving information can proceed with 
a minimum of wasted time, embarrassing interruptions, or failure to 
obtain or communicate pertinent facts. 

2. The Patterned Interview. The patterned interview is a 
planned interview, but one preplanned to a high degree of exactitude. 
It is based on the assumption that, to be effective, every pertinent de- 
tail of interviewing must be worked out carefully in advance. And, 
equally important, the interviewer must be skilled in its operation; he 
need not be a trained psychologist, but he must have the uncommon 
faculty of common sense and interpretative ability. 

The starting point in the use of the patterned interview is to have 
detailed job and man specifications. This provides the interviewer with 
one basis for arriving at the questions he expects to ask. Another 
basis is a careful study of application forms and references that candi- 
dates have submitted. From such sources a number of questions may be 
formulated. And those derived for one interview will be found to be 
pertinent to others. Hence most practitioners of the patterned interview 
develop a formal list, such as the excerpt illustrated in Figure 33. 

It should be noted that such a formal list does not limit the inter- 
view but, rather, acts as a guide to points that may be followed up as 
the conditions of a particular interview may seem advisable to him. 
For example, in the excerpt cited, the question relating to recreation 
is really intended to disclose something about the maturity of the can- 
didate. Hence the interviewer, should he decide that the hobbies of a 
given candidate seem of significance, may ask several questions ex- 
temporaneously about the hobbies in order to get at the underlying 
purpose of the simple question on recreation as listed. 

Thus the formal list of questions is but a device to aid the mem- 
ory of the interviewer. He follows through his check list and devises 
additional questions to amplify his knowledge of the candidate wher- 
ever needed. This is the point at which the psychological skill of the 
interviewer comes into play. As he gathers information from the can- 
didate, he must interpret it in the light of his understanding of normal 
standards of human behavior and attainments. Should he find from 
his questions on recreation habits, for example, that a given candidate 
seems immature for the job in question, the interviewer will be more 
vigilant when other classes of questions are asked, in order to ascertain 
whether or not the clue on immaturity is substantiated. 

In carrying out the patterned interview, it is, of course, necessary 
for the interviewer to be competent. He must know the rules of in- 
terviewing and how to elicit information. He must be well trained 



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170 PERSONNEL MANAGEMENT 

in measuring the behavior of people — whether this training is formal 
or self -acquired is not of importance. He himself must be emotionally, 
socially, and mentally well adjusted. And he must be aware of his 
organizational relationship to the candidate and those he serves through 
his interviews. 

3. The Nondirective Interview. In recent years much interest 
has been shown in the nondirective interview. As its name implies, the 
applicant in such an interview is not directed by questions or comments 
as to what he should talk about. While the "interviewer" may inter- 
sperse brief phrases, these should be noncommittal, so that the candidate 
determines the trend of conversation. 

The theory of such interviews is that a candidate is thus more likely 
to reveal his true self than when he answers set questions. In the latter 
case there is a much higher probability that the candidate will tend to 
give answers which he thinks the interviewer wants or answers that 
will get him the job, whether they are true or not. But in the non- 
directive approach, the candidate obviously does not know how to 
"slant" his replies or commentary. It has also been found that a candi- 
date not only is more likely to talk about things he thinks are important 
but also will relate things that are important to the interviewer. Indeed, 
what a candidate doesn't say may be as revealing about his competency, 
abilities, and interests as what he does say. 

Of course, the nondirective approach requires a much higher type 
of interviewer and of preplanning. In one respect, it is easier — the 
fact that questions are not asked makes it easier for the interviewee 
to relax because he doesn't tense as he does when questions are fired 
at him. In other respects, the task of interviewing is more complicated. 
As in the case of the patterned interview, a major preliminary step 
of the nondirective interview is to study the requirements of the job 
to be filled and then to learn as much about the candidate as possible 
from such sources as the application blanks, tests, and references. From 
such studies, the interviewer ascertains what he must listen for when the 
candidate is interviewed. 

Perhaps the most difficult part of this technique is carrying on the 
actual interview to the point or extent that the interviewer is sure 
that he can determine whether or not the candidate will be a success 
on the job in question. Starting such interviews is usually accomplished 
by putting the candidate at ease by the usual introductions, courtesies, 
and idle talk. Then the candidate is requested by an appropriate state- 
ment or opening question to talk about his personal history. After the 
candidate starts talking, the interviewer must keep the candidate talking. 
Suggested aids to do this are as follows: 



INTERVIEWING AND COUNSELING 111 

1. Give your entire attention to the applicant. 

2. Listen attentively and resist the temptation to talk. 

3. Never argue. 

4. Do not interrupt or change the subject abruptly. 

5. Use questions sparingly, but for purposes of keeping the candidate talk- 
ing, filling a gap in the story, obtaining more specific information, and 
checking conclusions. 

6. Allow pauses in the conversation, but interject some nondirective com- 
ment if the pause becomes uncomfortable. 

7. Phrase responses briefly. 

8. Keep conversation at level suited to applicant. 

9. Try to appreciate the applicant's underlying feelings. 

10. Diplomatically and carefully talk to applicants who seem to be withhold- 
ing information. 1 

As in the case of the patterned interview, the task of the nondirec- 
tive interview is to determine what kind of person the candidate 
really is. This means that the interviewer must be exceptionally skilled 
in measuring the story the candidate tells against the normal standards 
of human behavior, attitudes, and attainments. In terms of how the 
candidate conducts himself, from his disclosures of training and ex- 
perience, and from his statements on recreational and social activities, 
the interviewer must appraise the candidate's qualifications to fill the 
job in question. 

1. Interviewing Tools. Some interesting experiments are being 
carried on in the use of various tools as aids in interviewing. Some 
companies are recording important interviews so that the discussion 
may be reviewed with greater care in a more leisurely atmosphere. An- 
other example of mechanical aids is the use of a so-called "interaction 
chronograph" developed by Professor Eliot B. Chappie of Harvard 
University. The device is operated by pressing different keys during 
an interview. In this way measurements are obtained of the length 
of time each person talks, intervals between questions and answers, 
and tendencies to carry the discussion. The trained analyst then de- 
duces from these measurements such personality traits as inclinations 
to dominate or submit and to argue or agree. Results reported from 
its use indicate that this "mechanical interviewer" has increased the 
success in screening applicants. 2 

RULES OF INTERVIEWING 

A number of principles of interviewing have been developed by trial 
and error and by study of actual interviewing practices. Their adoption 

1 N. A. Moyer, "Non-directive Employment Interviewing," Personnel, March, 1948, 
pp. 383-87. 

2 Lester Smith in the Wall Street Journal, Monday, February 16, 1948. 



172 PERSONNEL MANAGEMENT 

does not provide an unfailing high road to successful interviewing but 
serves to increase the probability of a useful exchange of information 
or views. Nor does a mere listing provide anyone with automatic tools; 
they must be practiced in order to gain proficiency. 

1. Perhaps the basic rule of interviewing is to respect the interests 
and individuality of the interviewee. Unless one conveys a sympathetic 
understanding of the other fellow's point of view and desires, it is diffi- 
cult to develop a feeling of confidence, which is essential to getting or 
giving information. For example, an employment interviewer can easily 
antagonize applicants, merely because he "occupies the driver's seat," 
whereas the applicants are somewhat in the position of supplicants. 
Should this attitude manifest itself, the applicants tend to "freeze up" 
in giving information. Or, in interviews connected with handling ol 
grievances or disciplinary action, a superior must beware of implying 
that he is "smarter" than his subordinates. To underestimate the intelli- 
gence of employees in regard to their economic interests is foolish, and 
to display an attitude of superiority is certain to nullify any possible 
good of an interview. The use of trick questions is also to be deplored, 
unless, as in the case of stress-type interviews, they serve a real purpose. 

2. Also of high importance in interviewing is to pre-establish clearly 
the objectives to be gained or purposes to be served by interviews. 
Until this is done, it is impossible either to plan an interview effectively 
or to act convincingly during one. A practical difficulty, however, is 
that many interviews must be conducted on the spur of the moment. 
The pressure of other jobs may make it impossible to schedule inter- 
views so that allowances may be made for preplanning time. This ex- 
cuse should seldom be used in employment interviewing, but lack of 
time often affects the interviewing that takes place between executives 
at various levels and their subordinates. 

3. There is no principle of interviewing that has been more fre- 
quently stated — and deservedly so — than that of making the inter- 
viewee feel at ease. To this end, the interviewer must act and be re- 
laxed and at ease himself. Any failure in this respect, particularly 
where grievances or disciplinary action are concerned, results in an at- 
mosphere of tension and belligerence unconducive to a free exchange 
of ideas. In the employment interview, too, the feeling of newness that 
obstructs the interview must be reduced by placing the interviewee at 
ease. As good a way as any to attain a relaxed discussion is to start 
slowly with some topic known to both parties. No matter how busy the 
interviewer is, he must give the impression at the outset that sufficient 
time for an unhurried discussion is available. When time is short, it is 
preferable to postpone the interview. 



INTERVIEWING AND COUNSELING 173 

4. Another principle of good interviewing is to allow, indeed, to en- 
courage, the interviewee to talk copiously. In the case of grievances, 
for example, this practice serves not only to draw out the whole com- 
plaint but also to "cool off" the aggrieved party. Only by encouraging 
a full discussion, is it possible to lead the interviewee to unburden him- 
self to the point that nothing important or relevant is left unsaid. 
Hence ample opportunity for expression should be permitted. As a 
prerequisite for encouraging discussion, the interviewer should refrain 
from talking too much and from asking leading questions. Some carry 
this principle to the point of contending that in certain types of inter- 
views, e.g., those concerned with problem employees, the interview 
should be "unguided," that is, the interviewer should say no more than 
the absolute minimum needed to keep the interviewee from stopping 
talking, no matter what he talks about. It is felt that in this way the 
employee will eventually divulge what is really bothering him. 

5. An important suggestion to the interviewer is that he be a close 
student of the meaning of words, i.e., of the field of semantics. He must 
be sure that he knows what meaning an applicant gives to such words 
as "capitalism," "profits," "rights," and "merit." He must guard against 
using words that might arouse unnecessary antagonism or reservations, 
such as "low intelligence," "boss," "governmental interference," or 
"psychoneurosis." And, although very difficult to do, he must try to 
ascertain how words used by a particular individual may be colored by 
past working experiences or charged with emotionalism of personal 
experiences. 

6. The interviewer should keep his views and opinions to himself 
unless they are of significance to the interviewee or until the latter has 
had sufficient opportunity to express himself. Even though keeping 
quiet is difficult, he must develop this virtue. Moreover, should he 
make up his mind as to what is to be done, he should not end the 
interview abruptly but close it diplomatically, so that the interviewee 
feels satisfied that a full hearing has been accorded him. In the case 
of a job refusal, for example, the applicant may otherwise feel that the 
decision was hasty or based upon an incomplete picture of the facts. Or 
in the case of a grievance, the interviewee may gain the impression that 
the company was prejudiced from the start. 

7. In regard to concluding an interview, the interviewer should 
know how to draw it to a close and should be prepared to state his 
views or decisions clearly and concisely, and, if possible, conclusively. 
A final and positive answer need not be made; but, if such an answer 
is possible, so much the better. If an answer cannot be given with 
finality, it is a good rule to indicate what other steps are to be taken 



174 PERSONNEL MANAGEMENT 

and why. In addition, a definite time schedule for a decision or another 
meeting should be set. In this way, the interviewee is more likely to feel 
that the interviewer is capably and reasonably seeking a fair solution. 

8. Physical conditions and layout should be selected that are suitable 
to the purposes of the interview. In so far as practicable, quiet and 
secluded ( out-of -hearing, if not out-of -sight ) surroundings should be 
available. Few interviewees, whether looking for a job, airing a griev- 
ance, or being rebuked, want to be overheard by others. Most of us 
like to have others hold the opinion that we are accepted members of 
the group; an open interview may give evidence to the contrary. An 
unobtrusive location also makes k possible for the interview to proceed 
without interruption and with a minimum of distracting influences. 

9. It is well to note that the use of interviews is justified only when 
other means are not as effective, economical, courteous, or confidential 
in exchanging information. For example, such a question as the follow- 
ing is sometimes found on application blanks: "What financial obliga- 
tions do you have?" The matter raised is of such a personal nature, 
however, that it is likely to prove less embarrassing to a candidate if it 
is asked during an interview when the reason for asking it can be given. 
Some go so far as to say that interviews should be used to gather per- 
sonal and qualitative information, whereas other devices, such as appli- 
cation blanks and tests, should be used to secure quantitative informa- 
tion. This suggestion has some merit, although it is often difficult to 
draw a clear boundary line between qualitative and quantitative in- 
formation. Perhaps a more practical rule to follow is to gather as much 
factual and biographical data as possible on the application blank and 
then follow up in the interview with detailed questions on those sub- 
jects which appear, in a particular case, to have potentialities for adding 
useful clues. Thus, in nine cases out of ten, there may be no reason for 
following up the answers that applicants give regarding hobbies, let us 
say; but occasionally the listing may provide a basis for further per- 
sonal questioning of a person's hobbies, habits, and personal inclina- 
tions. 

RECORDING RESULTS OF INTERVIEWING AND COUNSELING 

Information obtained during an interview will soon be forgotten or 
become distorted unless recorded. While a few companies use sound 
recordings for this purpose, by far the greater number employ the 
printed and written word to preserve pertinent data and findings. An 
excellent example is contained in Figure 34 (pp. 175-76). This form 
succinctly records ( 1 ) the areas of information that are to be consid- 



INTERVIEWING AND COUNSELING 



175 



FIGURE 34. Interview Form 1 
(First Page) 



SIDEKEO FOR 



INTERVIEWER'S EVALUATION OF APPLICANT 

date_^__-^bLZ_.. i 9..!t.l 

INTERVIEWER S^^-Z^^^.^^u^^rr^f^. 



T-$Um£, :.<£)yLa^^^>^). 











3 MILITARY TRAINING 

4 BEST AND LEAST LIKED SUBJECTS 

B. REASON FOR LEAVING SCHOOL 



7. SCHOOL REFERENCE REPORT 













£-**-, 






IV SPARE TIME ACTIVITIES 

1. HOBBIES 

2. CHURCH ACTIVITIES 

3. COMMUNITY ACTIVITIES 

4. TYPES OF READING 

5. SOCIAL ADJUSTMENT FACTOR lent. 







Q*-~*~ ^V^r^ ^y.j^^ x ^SlZ- 






C—L~c*r ^U-J~. 



^¥--~v~ 



t^t- 



* Source: N. A. Moyer, "Non-directive Employment Interviewing," Personnel, March, 1948, pp. 391-92. 

ered, ( 2 ) the interviewer's findings by areas, ( 3 ) his interpretations of 
findings by areas, and (4) his total detailed evaluations. 



EVALUATING RESULTS OF INTERVIEWING AND COUNSELING 

The final test of interviewing and counseling is, of course, whether 
or not they achieve established goals satisfactorily. As noted earlier, 



176 



PERSONNEL MANAGEMENT 



FIGURE Z4.-Confmued 

(Reverse Side) 



AREAS TO CONSIDER 



INTERPRETATION OF FINDINGS 



V HOME & FAMILY BACKGROUND 

I. CHILDHOOD AND ADULT FAMILY LIFE 



X. FINANCIAL STATUS < 






4. HOME VISIT REPORT t.mii 



8. CREDIT INVESTIGATION REPORT 







VI HEALTH 



C&jLLL~-JL *£, 



-™ a—-"- '' ' ■•••„ x~~- v/— - 



fy^UU 



EVALUATION OF FINDINGS* 



JOB QUALIFICATIONS 


JOB 
SPEC 


EVALUATION 


JOB QUALIFICATIONS 


JOB 

SPEC 


EVALUATION 


I 


n 


111 


IV V 


VI 


1 


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IV 


V 


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COMMON QUALIFICATIONS IALL JOBS) 














EDUCATION. KNOWLEDGE. AND 
PROFICIENCIES 
















AGE (SATISFACTORY) 


V 


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CH C C ATI0°°rL«NK U ' 


MINIMUM FORMAL ( IN SCHOOL o 
A. EDUCATION OR EQUIV. ( YEARS .£- 


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GOOD HEALTH AND APPEARANCE 


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7 






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B. MATHEMATICS _ 


S 




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COOPERATIVENESS 






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C. PHYSICS 














PERMANENCY (DESIRE FOR) 


V 






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D PRINCIPLES OF ELECTRICITY 






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GOOD CONDUCT 


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E. HANDWRITING AND PRINTING- (NEAT) 


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INDUSTRY 


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G. STENOGRAPHY 
















INTEGRITY 


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H. MECHANICAL DRAWING 
















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APTITUDES: 
















SPECIAL QUALIFICATIONS 




□ 










A INTELLIGENCE 








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A APPEARANCE (PLEASING) 
















C ANALYSIS 
















B. STRENGTH 
















D. OVER. ALL PHYSICAL COORDINATION 








• 








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J 


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PERSONAL CHARACTERISTICS: 
















E. HEARING (NORMAL) 


• 


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D TACT 
































E. INTERESTS (STATE): 








7 


7 






WORK EXPERIENCE (STATE): 
































































* UNDER "JOB. SPEC" INSERT A CHECK 
MARK (V'l FOR EACH REQUIREMENT LISTED 
ON THE JOB SPECIFICATION UNDER "EVAL- 
UATION" INSERT. WHEREVER THE FINDINGS 
INDICATE IT: 
A CHECK (v'l TO INDICATE QUALIFIED" 


INTERVIEWER'S RECOMMENDATIONS 








CHECK / 1 WELL r-w' 
OVER- ALL I OUALIFIEDliJ 
CLASS. J 2 . , NTER . 
FOR 1 MEDIATE l_J 


FIEO- 






JOB \ QUALIFIED l_l 



































interviewing was once considered to be an unreliable tool of selec- 
tion; and, to this day, it remains so when performed in an unplanned 
and unregulated manner by unskilled executives. 

However, in those instances in which interviews have been care- 
fully planned by skilled personnel, the results have been highly sue- 



INTERVIEWING AND COUNSELING 



111 



TABLE 12 
Comparison of Initial Interview Score with Success Rating^ 

(Men and Women Combined) 



Foremen's 

success-on-the-job 

Rating 



Outstanding 



Interviewers' Ratings 



6 

(35.3%) 



(47.1%) 



3 

(17.6%) 



Above average 



2 
(1-2%) 



(53.0%) 



75 
(45.2%) 



1 
(•6%) 



Below average 



13 

(6.6%) 



175 

(88.8%) 



(4.6%) 



Very poor 



4 

(14.8%) 



23 

(85.2%) 



* Source: Robert N. McMurray, "Validating the Patterned Interview," Personnel, 
June, 1947, p. 270. 



TABLE 13 

Comparison of Driver Interview Ratings with 
"Pass-Fail" Criterion* 





Interviewers' Ratings 




1 


2 


3 


4 


Still in service (successful) 


6 

(75.0%) 


15 

(38.5%) 


12 
(26.1%) 


2 
(13.3%) 


Left service any reason (failures) 


2 
(25.0%) 


24 
(61.5%) 


34 
(73.9%) 


13 

(86.7%) 


Total number originally 

interviewed 


8 
(100%) 


39 

(100%) 


46 
(100%) 


15 

(100%) 





* Source: Robert N. McMurray, "Validating the Patterned Interview," Personnel, 
June, 1947, p. 270. 



cessful. Results of studies made by McMurray are rather conclusive in 
this respect. For example, as may be noted in Table 12, interviewers' 
ratings of prospective employees correlated very closely to the em- 
ployees' ultimate success on the job as measured by foremen's ratings. 
In another study of truck drivers ( selected excerpts of findings are tabu- 
lated in Table 13), he again finds a good correlation between inter- 
view ratings with "pass-fail" criterion. And in selecting salespeople 
by use of the chronograph, it was reported that in one company no 
one now sells less than 65 per cent of standard, as compared with a 
low figure of 35 per cent before the new technique of interviewing was 
used. 



178 PERSONNEL MANAGEMENT 

In connection with nondirective interviewing, the following results 
are claimed in one case: 

1. The percentage of turnover cases which could be ascribed in whole or in 
part to faulty selection, while the labor market was growing tighter, has 
declined steadily. 

2. The department supervisors say they are getting people better fitted for 
the work. Follow-up studies bear this out. 

3. Interviewers who have used both the questionnaire and the nondirective 
method say the latter enables them to make more effective appraisals. 

4. Applicants frequently tell interviewers they liked the interview because 
it did not seem like an interview. They had expected to be asked a lot of 
questions; instead, they just had a pleasant chat. 

5. Other companies in the Bell System that have adopted this method re- 
port similar results. 3 

These few studies could be supported by others indicative of similar 
results. They are sufficient to show the value of good interviewing 
practices. It is to be noted that such practices are not perfect; but they 
are far better than poor practices. 

SELECTING AND TRAINING INTERVIEWERS AND COUNSELORS 

It has already been noted that an important element in interview- 
ing is the skill of the interviewer. This suggests the need for careful 
selection and training of interviewers. 

In selecting interviewers, practice varies considerably. Some com- 
panies select for such work only those who are college trained in 
psychology and psychiatry. Others place emphasis upon mature ex- 
perience in the type of work for which people are going to be inter- 
viewed. But, allowing for variations, a list of qualifications would in- 
clude the following: 

1. A suitable background of experience similar to that of those who are to 
be interviewed 

2. Maturity of action and viewpoint, so that others unconsciously tend to 
assume an attitude of confidence and co-operation 

3. Experience and training in "sizing up" people from their behavior and 
actions (as opposed to mere physical build or appearance) 

4. A combination of an objective viewpoint and an appreciation of human 
feelings and attitude 

5. Good judgment, so that the "chaff may be separated from the wheat" dur- 
ing the interview and so that the proper weight is assigned to information 
obtained from the interview in relation to other sources of information 

6. An ability to work through organizational channels with supervisors and 
other executives 



Moyer, op. cit., p. 396. 



INTERVIEWING AND COUNSELING 179 

7. An ability to plan the work of interviewing and to see the total as well as 
individual implications 

Individuals with such capacities or potentials for their development 
are not too difficult to find in most companies. Usually the main thing 
to be done is to train available talent properly. A review of such training 
programs is therefore in order. 

The practices of training interviewers and counselors is varied. 4 The 
conference method is used for training counselors at the Warner and 
Swasey Company. After such training, the counselor is given to un- 
derstand that his job is as big as he wants to make it. He is also given 
the opportunity to continue evening courses at local colleges at com- 
pany expense. The Bell Aircraft Corporation uses instruction sheets 
that cover the following points: (1) factors common to all inter- 
views, (2) subjects to be covered during introductory interviews, (3) 
how to conduct follow-up interviews, and (4) how to conduct coun- 
seling interviews. The Briggs Manufacturing Company emphasizes 
plant visits and study of departmental policies in its training program. 
In the Servel, Inc., program, training revolves largely about the du- 
ties, problems, and responsibilities of the foreman and the work at his 
level. 

At the Bell Telephone Company at Philadelphia, the basic training 
given interviewers consists of ten lessons: 

1. Establish tentative job qualifications 

2. Review application for employment 

3. Preparation for conducting practice interviews 

4. Conducting practice interviews 

5. Recording the findings 

6. Interpretation of the findings 

7. Introduction of job specifications 

8. Evaluation of findings 

9. Closing the interview 

10. Practicing the complete interview 5 

In addition, trainees conduct practice interviews, study plant oper- 
ating departments, and write job specifications. Later, follow-up train- 
ing is given interviewers as specific cases require. 

Another good training device is a check list, which is used by the 
interviewer to review his own methods. One such list includes the fol- 
lowing suggestions: 6 

*The Employee Counsellor in Industry (New York: Policyholders Service Bureau, 
Metropolitan Life Insurance Co.), pp. 21-22. 

5 Moyer, op. cit., p. 395. 

6 An excerpt from training materials of the Ohio Employment Service. 



180 PERSONNEL MANAGEMENT 

a) Take the interviewee's point of view 

b) Examine and discount your own prejudices 

c) Help the interviewee to be at ease 

d) Deserve and gain the interviewee's confidence 

e) Listen 

/) Allow time enough without dawdling 

g) Take pains to phrase questions so that they are easily understood 

h) Avoid implying answers 

i) Avoid impertinence and embarrassment on the part of the interviewee 

j) Encourage the interviewee to qualify or explain answers 

k) Achieve something definite 

/) Make subsequent interviews easy 

m) At the close of the interview, watch for casual leads 

n) Separate facts from inferences 

o) Record all data at once 

SAMPLE OF INTERVIEWING INSTRUCTIONS 

An excellent review of the uses, content, and rules of interviewing 
may be obtained from the following excerpt of instructions contained 
in a pamphlet on personal counseling: 

I. The responsibilities which constitute the major part of a counselor's work 
may be explained as follows: 

A. Counseling employees as part of an orientation program 

Employees with immediate need for housing, financial, or other aid 
are sent to employee counselors for aid if the first interviewer is not 
prepared to take care of such cases. The counselor should have up-to- 
date information as to rooms available and should help find a place by 
telephone so that the employee's anxiety on this score may be allayed. 
If funds are needed, the employees should be directed to some local 
agency through which a loan can be obtained, with arrangements for 
repayment on the first or second pay day. 

The person who conducts the first brief interview will arrange for 
the employee to go to the counselor for his entrance interview some- 
time during the first week. If this is not practical, employees may at 
some time in the induction process be sent to the counselor either to 
have the full interview or to make an appointment to see the coun- 
selor sometime during his first week. 

This interview usually takes from 20 to 45 minutes. If possible, the 
personal history of the employee should be obtained beforehand and 
entered on the counseling interview blank. 

The employee is urged to raise questions about personal needs and 
employment. The counselor acquaints the employee with facilities 
and resources which will contribute to his well-being and a more 
ready adaptation to the job. Everything possible should be done to 
make the employee's first experience with the counseling program 



INTERVIEWING AND COUNSELING 181 

satisfying and helpful, so that he will wish to return if the need arises. 
In many installations, the counselor may be the ideal person to intro- 
duce the employee to the supervisor. These informal contacts also 
help to promote good relationships between supervisors and coun- 
selors. 

In an adequately-staffed counseling service, time can be taken for a 
regular follow-up interview with each employee within a month of 
his induction. This is a part of the orientation process in that its 
purpose is to check on job and personal adjustment after a reasonable 
period at work and to arrange for further assistance as needed. 

B. Counseling employees on a voluntary or referral basis 

a) General counseling interviews which are not a part of the orien- 
tation or exit interview program are sometimes classified for re- 
search purposes and in monthly summaries as follows: 

(1) Initial interview, which applies to the first interview with 
employees already on the job when the counseling program 
is established. This breakdown is useful in showing the de- 
gree to which older employees accept the counseling service. 

( 2 ) Renewal interview, which includes all counseling interviews 
with an employee after the first, excepting only the exit in- 
terview. 

b ) Many kinds of questions and difficulties are presented in these in- 
terviews because they grow naturally out of the needs and reac- 
tions of employees. The counselor will have to draw on all his 
knowledge and use all his skill and common sense in order to 
meet them adequately. 

c) Studies show that among Federal employees in large cities, coun- 
seling interviews deal most frequently with these subjects: 

( 1 ) Housing 

( 2 ) Budgeting and finances 

(3) Adjustment to job 

(4) Adjustment to community 

(5) Health 

( 6 ) Family problems 

(7) Emotional and mental disturbances 

(8) Legal aid and insurance 

d) The elements which will go into meeting any one problem are 
defined in the several sections of this statement on counseling. 
The fusing of these elements into an instrument which will op- 
erate to help the employee solve his problem is a matter for the 
individual counselor to work out according to his particular abili- 
ties and the resources available to him. 

e) While the person-to-person talk is the fundamental method used 
in counseling, the counselor who is thoroughly trained in the ad- 
ministration and interpretation of tests, case history investigations, 
and other special procedures may wish to use them occasionally. 



182 PERSONNEL MANAGEMENT 

C. Counseling employees in exit interviews 

While the aid of the supervisor in routing employees to the counselor 
is important to the success of an exit interview program, it is even 
more important that the counselor have the confidence of employees 
to the extent that they will seek his aid when circumstances arise 
which make them wish to leave the service. 

D. Working with supervisors and others to bring about necessary adjust- 
ments 

1. In many ways the counselor is a co-ordinator of all the activities 
and services of the plant as they converge upon the individual 
employee when he has a particular problem. In that role it becomes 
necessary for the counselor to gather related information from 
supervisors, health and safety, placement, classification and wage 
administration staff and others and to suggest to them or with their 
help work out ways for meeting the employee's need. 

2. Counselors utilize meetings with small groups of supervisors for 
promoting understanding of employee relations functions and for 
an exchange of information pertaining to employee adjustment. 

3. It may seem that by conferring with other people about employees 
the principle of confidential relationship will be violated. The 
counselor should always have the permission of the employee be- 
fore divulging anything confidential. 

E. Conferring with management officials concerning personnel policies 
and working conditions 

1. Through day-to-day contacts with individual employees, who speak 
freely because they know he has no direct administrative authority 
over them, the counselor has an unparalleled opportunity to gain 
insight into employee reactions to the policies and practices of 
management and to working conditions within the plant. 

2. Usually, such information is collected and made up into a report 
which is transmitted through the proper channels to responsible 
officials who will be in a position to revise and modify policies 
and procedures. 

II. Interviewing 

A. The method most commonly used by the counselor is the interview, or 
to express it more simply, a talk with the employee. Sometimes this 
takes place informally at the employee's desk or workbench or wher- 
ever the two may meet. More often, because of the comparative rigid- 
ity of shift and work hours, and the necessity for having counselors 
available at a definite place part of the time, the employee goes to the 
counselor. The spirit and general atmosphere should be kept as 
friendly and informal as possible under these circumstances. 

B. Skill in managing the exchanges of the interview is acquired gradually 
and with experience. Interviews dealing with purely informational 



INTERVIEWING AND COUNSELING 183 

material are usually easy to manage. Those involving personal matters 
are more difficult and are likely to take up too much time unless they 
are carefully directed. The suggestions given here have grown out of 
the experience of successful interviewers. 

C. Counselors will follow all or some of the following procedures accord- 
ing to the circumstances and the problem presented: 

1. Offer the individual opportunity to tell freely what is on his mind. 
This relieves tension, tends to clarify his problem for him, and 
gives the interviewer insight into the way the employee is think- 
ing and feeling. 

2. Ask an occasional question to clarify a statement. In this way the 
counselor may gain more information about the area of difficulty, 
the length of time the problem has existed, and the methods al- 
ready used in dealing with it. 

3. Give encouragement to think through the problem; suggest or get 
him to discover for himself a solution or next step to take. If the 
employee works out a way for himself, he is much more likely to 
pursue it than if he is told what to do. Avoid giving advice or 
prescribing a course of action unless the circumstances make it 
absolutely necessary. 

4. Show consideration for the person to be interviewed, for example, 
in adjusting your time to his convenience, taking note of his good 
qualities, reassuring him, and offering him a choice whenever 
choice is possible. 

5. Ask for advice or suggestions. This approach is often successful in 
winning co-operation and building self-confidence. 

D. There is only one basic rule for counselors to follow in talking to 
employees, take a sincere interest in what the person is saying and try 
to understand and meet his need. It is especially important to keep a 
friendly attitude and to avoid dealing with matters in an overly- 
analytical way. 7 

INTERVIEWING IN CONNECTION WITH TESTING PROGRAMS 

A particularly difficult area of interviewing is that concerned with 
counseling those who have taken psychological tests. An excellent exam- 
ple of suggestions which executives should follow in such cases is seen 
in the following excerpt from a test interpolation manual prepared for 
each personnel manager of branch plants and divisional units of a large 
company: 8 

Introduction 

Most persons who have been tested are intensely curious about their results. 
At the same time they are frequently apprehensive. They may come to the in- 

7 Personnel Counseling (Civilian Personnel Pamphlet No. 1) (Washington, D.C: 
War Department, 1943). 

8 Hubert Clay, "Experiences in Testing Foremen," Personnel, May, 1952, pp. 466-70. 



184 PERSONNEL MANAGEMENT 

terview somewhat tense and nervous, and everything possible should be done to 
put them at ease. 

The test profiles are arranged so that the interest patterns are discussed first, 
ability and aptitude second, and personality characteristics last. This sequence is 
followed because it is believed to be most conducive to free discussion. 

The interview should be held where interruptions will not occur. Plenty of 
time should be allowed so that the interview need not be terminated if the in- 
terviewee wishes to talk. He may get into a mood for discussion which will 
never occur again, and an unusual opportunity is lost if he is hurried away. If 
interruption or too-early termination is positively unavoidable, another appoint- 
ment should be suggested. 

Nothing at this time, not even skilled test interpretation, is so important as a 
genuine human interest in the individual. This implies an understanding, non- 
critical attitude which encourages talk. Avoid cross-examinations in regard to 
test findings and do not use test results as a basis for criticism of job performance. 
If he wants to discuss any problems which the tests bring out, let him take the 
initiative. 

Interest Patterns 
The discussion of interests provides an easy opening to the interview because 
nothing threatening to the individual is involved. His scores in an interest area 
can be either high or low and he is not upset. By the time he has gone through 
his interest scores and agreed or disagreed with them he is usually relaxed and far 
better able to accept anything unfavorable which may come up later in the inter- 
view. The interviewer, too, has a chance to "size up" the individual and his reac- 
tions during this warm-up period and thereby handle the balance of the inter- 
view more smoothly. 

Ability and Aptitude 

The discussion of ability and aptitude has to be carefully handled, especially 
in the case of an individual whose scores are below the average. This is particu- 
larly true of low general ability scores. Avoid using the terms "intelligence" and 
"IQ." It can be pointed out to the individual that one reason for reporting the 
results in letter grades is that some persons get too concerned over differences in 
numerical scores, even when the differences are too small to be significant. 

It may be advisable to stress to the interviewee the research nature of the 
project and to say quite frankly that we do not know yet how much a given score 
means as far as supervisory success in our company is concerned. It should be 
emphasized particularly that the best men do not necessarily get the highest 
scores. 

An important aspect of ability testing is the fact that while we can measure 
a man's ability we cannot measure his willingness to use that ability. Many men 
of high ability fail to succeed at a high level because of a lack of persistence, 
initiative, and other hard-to-measure qualities. 

Personality 
The discussion of personality is left until last because it often results in the in- 
dividual "opening Tip" or unburdening himself of some problem or problems. 
It is a great advantage to be able to continue such talk, as mentioned earlier. 



INTERVIEWING AND COUNSELING 185 

It should be remembered that scores on a personality questionnaire depend 
upon the individual's willingness and ability to rate himself frankly and honestly. 
Some persons merely answer the questions the way they think they should be 
answered rather than the way they actually feel. It is always well to inquire 
whether the scores agree with the individual's estimate of himself. For example: 
"Do you believe that you have more energy than the average man, as this score 
indicates?" or "This score suggests that you tend to be oversensitive and rather 
easily hurt. Is that an accurate picture of you?" 

Certain personality traits cannot always be accepted literally. The individual's 
behavior actually may be a cover-up for the opposite tendencies. Aggressiveness, 
for example, may be an artificial role which a man assumes to cover up feelings of 
inadequacy and insecurity. This kind of aggressiveness is quite different from a 
wholesome aggressiveness expressed by a really confident person. Personality 
scores should always be compared, if possible, with observations of the individual 
in his everyday living. Scores should never be presented as final and conclusive 
evidence. Rather, they should be thought of as guideposts which may help a per- 
son to gain insight into himself and his relations with others. 

QUESTIONS AND PROBLEMS 

1. A given executive in conducting interviews follows the plan of making no 
advance preparations on the grounds that he thereby undertakes the inter- 
view without any preconceived or prejudicial notions. Comment upon this 
plan of interviewing. 

2. Under what conditions would you use interviewing to give and get informa- 
tion, and under what conditions would you use other tools, such as applica- 
tion blanks, tests, and reference letters? 

3. What is the difference between qualitative and quantitative information? 
Cite examples of each. 

4. Prepare a set of "patterned interview" type of questions for hiring a stenog- 
rapher. Try out the list with a fellow student, and report on how the original 
list of questions could be improved. 

5. Try out a nondirective interview before the class on a student who is tardy, 
in order to try to determine why he came in late. Do your difficulties give a 
clue to the kinds of problems for which this type of interviewing can and 
cannot be used? Explain. 

6. Do you expect the nondirective method to be used widely in industry? Why 
or why not? 

7. If recording instruments are available, try out an exit interview. What les- 
sons are learned from the playback that might otherwise not be learned? 

8. Can most executives become good interviewers? If they can, how should 
this objective be sought? If they cannot, what are your recommendations? 

9. Make some notes indicating what the interviewer must do in order for him 
to keep an "unguided" interview from being guided and from coming to an 
inconclusive halt. 

10. Produce a sample interview in which one student, acting as an employment 
manager, interviews another student who acts as a candidate. Have a third 



186 PERSONNEL MANAGEMENT 

student act as an observer and make notes on the interview. The observer 
should then suggest improvements in the interview. The students should 
then rotate roles. If recording devices are available, record the interview 
and play back the recording for class discussion. Do not look for faults ex- 
cept to improve the method of interviewing. 

11. If you were to interview a candidate for employment, what preparations 
would you make and with what types of information would you first acquaint 
yourself? 

12. Assume that an employee comes to you, his supervisor, with a grievance. 
Assume further that he is decidedly upset. Suggest ways and means to put 
him at ease. 

13. It is said that allowing interviewees to talk freely is a desirable way to settle 
many problems. How can the average executive find time to give employees 
unhurried discussions? 

14. Suggest ways in which an interviewer may draw an interview to a close, 
gracefully, yet conclusively. 

15. What is the objection to the practice of taking notes during an interview? 
How else may the interviewer be sure of remembering exactly what he 
should remember? In what types of interviews may note taking be desirable 
and permissible? 

16. Suggest ways in which appropriate physical arrangements for interviewing 
may be provided for supervisory interviews in the shop. 

17. What is meant by counseling? In the industrial enterprise, whose job is it 
to counsel? Why is counseling a task of industry at all? 

18. An employee who was dissatisfied with his progress went to the personnel 
manager to complain. The personnel manager advised the employee to seek 
work elsewhere. Suggest possible reasons why such advice was given. 

19- It has been said that, in the final analysis, each person must make his own 
decision regarding a choice of vocations. If this is so, why do people so 
often seek advice from others regarding the relative merits of alternative 
occupations, companies, and localities of work? Discuss the term "voca- 
tional guidance." Note to what extent guidance is interpretative and to 
what extent it is actually directive. 

20. In interviewing a candidate for employment whom you believe possesses ap- 
titudes that fit him for advancement, what questions would you ask him in 
order to check on his future possibilities? 



CHAPTER 

10 ests 



POPULARITY OF TESTS 

Perhaps no subject in the field of selection has received as much study 
and attention as that of testing. Since World War I, when psycho- 
logical tests were adopted by the U.S. Army as a means of aiding in 
the placement of army personnel, much has been written about tests, 
their development, application, and usefulness. But even as late as 
1940, usage did not come up to the volume of writings. In that year, 
one student found only eight companies which to his knowledge were 
making systematic and extensive use of tests in the selection of em- 
ployees. Obviously, after a period of over twenty years, this was not 
an admirable record. Although data are not available, it appears that 
many companies adopted testing programs during and after World 
War II. Estimates based upon recent sample surveys would put current 
usage somewhere around ten thousand. 

The limited usage is not, however, a serious reflection upon the 
desirability and feasibility of testing. Nor is the fact that numbers of 
companies have discontinued the use of tests a sign of the inherent 
weaknesses of tests. Limited usage or discontinuance of programs may 
be due to a number of reasons. Some companies do not care to invest 
the time and money needed to build a successful testing program. Others 
became discouraged because tests did not "solve" their hiring problems, 
a conclusion they should have reached before seeking a cure-all. And 
others think that their selection problems are susceptible to more under- 
standable solutions. 

As experimentation continues, refinements are bound to lift testing 
above such arguments. Tests will sooner or later become a generally 
accepted tool of personnel management. The use of tests requires much 
study and skill, however, and for these reasons it has perhaps lagged in 
adoptions. And, for similar reasons, the complexity of the subject will 
permit no more than a generalized discussion of testing here. This dis- 
cussion is taken up under the following headings: 

187 



188 PERSONNEL MANAGEMENT 

1. Basic concepts and assumptions of testing 

2. Purposes for which tests may be used 

3. Types of tests 

4. Operating a testing program 

5. Rules in testing 

BASIC FUNDAMENTALS 

It is desirable to understand at the outset that a test — any test — is 
a process of measurement. By such measurement it is hoped to deter- 
mine how well a person has done something or may do something in 
the future. The measurement may be in intangible or quantitative 
terms. When we "size up" a person, for example, we are selecting a 
sample of the person's activities and reaching a qualitative conclusion 
about him. Thus, upon being introduced to someone, we decide imme- 
diately or soon after that our new acquaintance is a "right guy" or per- 
haps someone who should not be trusted. Our judgment is qualitative, 
since we do not specify how "right" or how untrustworthy he is. Never- 
theless, in our own fashion, we have given a test and reached a con- 
clusion regarding his future performance. 

On the other hand, our conclusions may be expressed quantitatively. 
As a result of a formal intelligence test, a definite score would be 
obtained for each person, e.g., intelligence quotient of 102. Of course, 
a quantitative score is better in the sense that it can be communicated 
to others more readily, yet it is not necessarily any more accurate than 
qualitative scores or verbal descriptions. 

To note another fundamental characteristic, tests are samples. Al- 
though the most accurate basis for measuring a person's value to a con- 
cern is his performance, obviously this is not possible in the case of job 
applicants, for example. It is impractical to hire all applicants and then 
retain only those who prove satisfactory. Instead, applicants may be 
asked to work on a sample of actual operations or on factors that are of 
importance in actual operations. In the case of typists, for example, 
candidates may be requested to transcribe or copy a set of material. 
Their efforts in terms of such measures as speed of typing, neatness of 
work, and number of errors would then be established. Or tests might 
be given in regard to such elements as finger dexterity, visual acuity, 
and word memory on the assumption that these are basic factors in 
typing success. That a test is a sample need not destroy one's confi- 
dence in them. So long as steps are taken to see that given samples 
are truly representative of the areas of which they presumably are sam- 
ples, their usefulness is not questionable on that score. 

Another fundamental assumption regarding tests is that they are 



TESTS 189 

relatively accurate measures of past efforts or predictors of future 
events. This assumption or characteristic of tests must be clearly under- 
stood, else an inevitable avenue to failure will be followed. On the one 
hand, the score of a test, which is intended to disclose how much experi- 
ence, training, or ability along given lines one has acquired, does not dis- 
close unerringly what may happen in the future. The very characteristic 
that a sample is a sample precludes unequivocal forecasts. But the test 
score is a better predictor, when used in combination with other methods 
of evaluating people, than intuition and observational appraisals. 

On the other hand, tests which seek to predict future events, al- 
though useful, are as yet more accurate in their negative implications 
than in their positive significance. For example, if Candidate A receives 
a high score on a battery of tests and B receives a low score, the reason- 
able deduction here is that B is not likely to succeed if hired and hence 
should not, other things considered, be hired. As for A, it is plausible 
to expect him not to fail, but the contention at the present stage in the 
development of tests is not that he will succeed in proportion as his 
grade is high. 

And, finally, even the most enthusiastic supporters of tests do not 
insist that decisions regarding applicants or employees be reached solely 
on the basis of test scores. This technique should be viewed as a con- 
tributor to the process of hiring, for example. It should add to the 
sum of information gathered from application blanks, references, ob- 
servation, and interviews. Its measurements should be given a place in 
the general scheme of interpretation and not be permitted to usurp or 
minimize the contributors of other tools. Perhaps the chief reason for 
dissatisfaction with tests has arisen out of the fact that, when reliance 
has been placed upon them as the major source of information, they 
have proved unreliable. Hence, at the outset, it is imperative to re- 
member that, although the discussion here is concerned with tests, they 
are to be viewed as contributory and not the only source of information. 

In the various tasks related to selecting, developing, maintaining, 
and utilizing labor, innumerable decisions must, of course, be reached. 
What is the best basis or bases upon which to build decisions? To pro- 
ponents of tests, these devices constitute an indispensable and increas- 
ingly accurate tool. As one writer has put it, "The most important 
results of our six years' experience [with tests] is to enable me to say 
without hesitation that it is beyond anyone's power to do as good a job 
of employment without tests as can be done with their careful use." 1 

1 Edward N. Hay, Inaugurating a Test Program (Personnel Series No. 43) (New 
York: American Management Association, 1940), p. 26. 

</ 



( 



190 PERSONNEL MANAGEMENT 

Yet this same writer is not blinded by his enthusiasm but adds the 
following words of caution: "Don't expect too much from tests. Re- 
member that they give information which must be used with judgment 
and experience in conjunction with other facts about the applicant or 
employee. Test scores alone cannot be depended upon to give the 
answers." 2 

PURPOSES OF TESTS 

The purposes for which tests may be used do not preclude the use of 
other techniques at the same time for the same purposes. The purposes 
of testing discussed now are those related to employment, placement, 
and training. 

1. Operative Employment. Evidence is plentiful that tests have 
proved helpful in screening applicants for employment. An example 
of successful testing is found in a company that compared 88 hirings 
with testing and 45 without testing during a five-month period. 3 Per- 
centages of those who subsequently failed on the job was 7.8 for those 
tested and 49 for those not tested. Based on a minimum cost of $55 
to train a replacement, $990 was lost by not testing the 45. This figure 
was computed on the assumption that testing the 45 would have elimi- 
nated the unfit from this group as successfully as it did with the 88. In 
that event, only 4 would have had to be replaced, instead of 22, as was 
the case. The saving in 18 replacements at $55 would have amounted 
to $990. On the other hand, if the 88 had been hired without testing 
and if 49 per cent had failed — as was true of the nontested group — the 
loss would have been $2,035 ($55 X 37). 

An example of how effective a single test can be is shown by an 
analysis of the production record of workers whose vision differed. It 
was found that average hourly earnings of employees who met visual 
standards were $0,827 as compared with $0.69 for those who did not. 4 
Thus the former earned about 20 per cent more than the latter. More- 
over, the quality of workmanship of the former was found to have in- 
creased about 8-15 per cent. 

2. Executive Selection. Although the surface has been little 
more than scratched, much study has been given to the adoption of 
tests for screening executives, particularly at the supervisory level. Here, 
more than in the case of operative levels, it is necessary to combine 

2 Ibid., p. 33. 

3 A. R. Michael, "Tests Help Cut Turnover Rate 74% in Five Months," Factory 
Management and Maintenance, Vol. CIX, No. 5, pp. 78-80. 

4 N. Frank Stump, "Vision Tests Predict Worker Capability," Factory Management 
and Maintenance, February, 1946, pp. 121-24. 



TESTS 191 

ratings and interviews with selected batteries of tests, to be able to 
screen potentially good from inferior supervisors. Thus to results of 
tests on such factors as interests, emotional stability, general intelli- 
gence, and personality must be added opinions on such factors as train- 
ing, experience, social responsibilities and relationships, productive 
record, and hobbies. 

In this connection, the conclusion reached in one company that 
has had success with such a program is of particular interest and 
value: "The chief value of such a plan is negative in nature. That is, 
the absence of the necessary training, experience, mentality, and in- 
terests to do a given job is an excellent indication that a person can- 
not do the job, but the presence of these traits is no guarantee that 
a man will do the job. (Because of the importance of attitude, do- 
mestic relations, lack of motivation or incentive, etc. ) " 5 

Another company installed a selection procedure heavily weighted 
with psychological testing, interviewing, and performance analysis. 6 It 
reported that, before installation, 1 out of every 2 foremen failed, on 
the average. In the first year after installation, one of its factory units 
had 33 successes out of 35 promotions to the supervisory level. 

3. Selection of Sales Engineers. Merely to provide one more 
example to illustrate the fact that the most technical jobs are not be- 
ing overlooked by students of testing, brief reference is made to ex- 
perience with sales engineers. One company has employed tests of 
vocational interest, mental maturity, personality, and mechanical apti- 
tude with other selection devices. It feels that its selection and place- 
ment of its sales engineers may be improved by 10-20 per cent by the 
use of psychological tests. 7 This conservative estimate contains an im- 
portant moral: A selection device should not be judged by whether it 
provides perfect results but rather by its capacity to make a reasonably 
significant improvement in results. 

4. Tests in Placement. A report in connection with the se- 
lection of apprentices is of interest, in that it shows that tests have been 
used in connection with other than strictly production jobs with satis- 
factory success. 8 In this case twenty-four applicants for an apprentice 
course were given tests, and the results thereof were then compared 

5 Lee Lockford, "Selection of Supervisory Personnel," Personnel, November, 1947, 
p. 199. 

6 Matthew Radom, "Picking Better Foremen," Factory Management and Maintenance, 
Vol. CVIII, No. 10, pp. 119-22. 

7 James Onarheim, "Scientific Sales Engineers," Personnel, July, 1947, p. 34. 

8 C A. Drake, "Aptitude Tests Help You Hire," Factory Management and Mainte- 
nance, June, 1937, p. 92. 



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TESTS 



193 



FIGURE 35. Relationship between Scores on 
a Finger-Dexterity Test and Average Learning 
Cost to the Plant in Minimum Make-up Pay* 



with test scores of present apprentices who had been hired without 
tests. The data in Table 14 disclose rather strikingly how ineptly the 
selection process had functioned in the past. The first eleven appren- 
tice-applicants outranked all the present apprentices. This shows strik- 
ingly not only that hit-or-miss 
methods of selection are expensive 
for the company but that they are 
unfair to applicants who are mis- 
hired and misplaced. 

5. Tests in Training. Tests 
have also been useful in strength- 
ening training programs. An inter- 
esting example of this is reported 
in using tests to determine who 
should be trained, where training 
should begin, and whether training 
has been adequate. It was found 
that the learning cost of employees 
who had scored lowest on a finger- 
dexterity test, as measured by a 
simple peg board, averaged $59.00 
before they earned the minimum 
hourly rate on a piecework basis. 
On the other hand, those with the 
highest finger dexterity incurred a 
learning cost of $36.40 before 
making the rate. Figure 35 illustrates these relationships. Obviously, 
savings in training costs would more than offset the cost of such selec- 
tion tests. 

This report also showed that tests can save training costs by de- 
termining where training should begin. On a simple measurement 
question asked about an illustration showing some blocks adjacent to a 
scale, it was found that 70 per cent of 650 applicants were unable to 
read to Vs2 inch. Obviously, training would be wasted in these cases 
unless the training were started at a level low enough to teach meas- 
uring fundamentals. 

The question of whether training has been adequate is also of sig- 
nificance. Figure 36 illustrates the relation between scores on an elec- 
trical information test and hours of instruction. By pre-establishing a 
measure to indicate when a person has sufficient knowledge to handle a 
particular job, it is possible to determine how many hours of training 









$60 
§8 $50 

!« 

A % $40 
•o .* 
'B§ 

« i 

U £ $30 

d a 

o 




































Poorest A veraae Best 
Dexterity Dexterity 



* Source: C H. Lawshe and Joseph Tiffin, "How 
Tests Can Strengthen the Training Program," Factory 
Management and Maintenance, March, 1944, pp. 119-21. 



194 



PERSONNEL MANAGEMENT 



FIGURE 36. Relationship between Length of 

Training Period and Scores on an Electrical 

Information Test* 



to 
o 

H 100- 

s 

.2 

1 8a 

M 
O 

S 60 

8 40 

1 20- 
c 
° 




































































0) 
u 
O 

o 
(A 


100 200 300 400 500 600 
Hours of Instruction 



are ordinarily required to attain the desired score. Thus, if it is decided 
that anyone who has a grade of 80 may be turned loose on a job, then, 
by the use of such a chart as that in Figure 36, it may be noted that 
training would be needed for about 200 hours. Obviously, any figure 

above or below this would be 
wasteful either by overtraining or 
by poor production due to under- 
training. 

In brief, the foregoing has 
shown that tests have been used 
successfully in selection, place- 
ment, and training. Although 
most work with tests in these fields 
has been done largely with repeti- 
tive jobs in the factory or office, 
there is a growing tendency to ex- 
pand the area of usage to include 
various highly skilled and profes- 
sional fields. Much has been done 
recently with tests in the sales 
field, for example. It should be 
remembered that this discussion 
of why tests are used has made little reference to where they may be 
used, because there seems to be no field in which they cannot be applied 
with some degree of success. 

TYPES OF TESTS 

Having seen the uses to which tests have been put, it would now be 
desirable to review and describe various kinds of tests. Time and space 
preclude this because estimates show that tens of thousands of tests 
have been developed. No one single classification of tests is sufficiently 
descriptive of all types; hence in the following presentation considera- 
tion is given to: 

1. The human characteristics being tested 

2. Individual versus test batteries 

3. Mechanical construction of tests 

4. Illustrations of common tests 

Perhaps the most common classification of human characteristics 
for testing purposes is intelligence, skills, interests, and personality. 
Among the earliest tests, and still of great prominence, are those re- 
lating to native intelligence. Perhaps next in order are those relating 



* Source: C H. Lawshe and Joseph Tiffin, "How 
Tests Can Strengthen the Training Program," Factory 
Management and Maintenance, March, 1944, pp. 119-21. 



TESTS 195 

to skills; i.e., the ability to do things. These may refer to: aptitude — 
the potential to develop skills — or proficiency or achievement — the 
skill which one has acquired. Interest tests seek to ascertain the pref- 
erences one has for alternative choices of occupations, professions, or 
avocations. And personality tests measure poise, personal adjustment, 
temperament, emotional and social balance, extroversion versus in- 
troversion, etc. 

Another way of classifying human characteristics is suggested in the 
following grouping: 

1. Tests to Measure the Ability to Understand and to 
Use Ideas (and Analysis of Ideas). These ideas include: the 
material out of which are made all abstract and general thinking; all 
chemical formulas, legal decisions, and scientific principles; all the 
higher forms of thinking that differentiate the human from the animal; 
all plans, programs, values, and logical thinking such as similar and 
dissimilar, profit and loss, cause and effect, and right and wrong. The 
ability to understand and to manage ideas and their symbols is spoken 
of as common sense, verbal intelligence, ingenuity, practicability, and 
educability. 

2. Tests to Measure Clerical and Mechanical Aptitudes 
and Abilities. These refer to such aspects as the ability to understand 
and to manage things and mechanisms: the motor control essential for 
skilled handwork; the mechanical imagination essential for the creating 
and for using complicated blueprints; co-ordination of hand and eye 
essential for running a machine whether it be a typewriter, a printing 
press, a bicycle, or an airplane. 

3. Tests to Measure Occupational Interests and Abili- 
ties. Reference here is to such aspects as vocational interests, per- 
sonality inventories, supervisory insight into human relations, and super- 
visory appraisals. 9 

Another interesting bases for classifying tests arises out of the use 
of a group or "battery" of tests instead of a single test. A battery of 
tests is considered to give much better results. This does not mean 
that a candidate must receive high grades on all the tests given. On 
the contrary, some of the tests included in a battery may be given 
with a view to finding what things, a candidate is not equipped to do 
or interested in doing. This tends to strengthen conclusions reached on 
the "positive" tests included in the battery. Some examples of test bat- 
teries include the following: 

9 W. D. Scott, R. C Clothier, and W. R. Spriegel, Personnel Management (New 
York: McGraw-Hill Book Co., Inc., 1954), pp. 255, 268, and 285. 



196 PERSONNEL MANAGEMENT 

1. In order to derive a picture of a person's general aptitudes or interests, 
tests have been given for the following characteristics: 10 

a) Finger dexterity, or manipulative skill 

b) Accounting aptitude — clerical aptitude 

c) Ability to visualize structure 

d) Tweezer dexterity 

e) Inductive reasoning 
/) Creative imagination 
g) Visual memory 

h) Observation 
i) Personality 
;) Tonal memory 

2. In one experiment, inspectors were given the following battery of tests: 11 

a) The Minnesota Rate of Manipulation Test to measure hand and finger 
dexterity 

b) The Purdue Hand Precision Test to check co-ordination between 
hand and eye 

c) Tests of reaction time and strength of grip 

d) Stereoscopical vision tests 

e) Measures of height, weight, and age were also recorded 

3. In checking the usefulness of tests for time study men, the following 
battery of tests was employed: 12 

a) Otis Employment Test (general mental ability) 

b) Bennett Mechanical Comprehension (in mechanical comprehension) 

c) Moore Arithmetic Reasoning (in quantitative thinking) 

d) Minnesota Paper Board Form (in visualizing bidimensional objects 
in relation to space) 

e) Guilford-Martin (working with and getting along with others; 
objectivity, agreeableness, co-operativeness) 

/) Kuder-Preference (in major interests; mechanical, computational, 
scientific, persuasive, artistic, literary, music, social service, clerical) 

4. A battery of tests given to supervisors included the following: 13 

a) Strong Vocational Interest Blank for Men 

b) Kuder-Preference Record 

c) Wonderlic Personnel Test 

d) Classification Test for Industrial and Office Personnel 

e) How Supervise 

/) General Clerical Test 

g) Test of Mechanical Comprehension 

h) Guilford-Zimmerman Temperament Survey 



10 Johnson O'Connor, Making Fullest Use of Present Personnel (Office Management 
Series No. 79) (New York: American Management Association, 1937), pp. 4-16. 

11 Joseph Tiffin and H. B. Rogers, "The Selection and Training of Inspectors," Per- 
sonnel, July, 1941, pp. 14-31. 

12 Charles A. Thomas, "Special Report on a Test Analysis of a Group of Time Study 
Men," Advanced Management, August, 1953, pp. 13-14. 

13 Hubert Clay, "Experiences in Testing Foremen," Personnel, May, 1952, pp. 466-70. 



TESTS 197 

5. A battery of tests used in a selection procedure for salesmen included the 
following: 14 

a) P.R.I. Classification Test 

b) Purdue Adaptability 

c) Minnesota Paper Board Form 

d) Cardall Test of Practical Judgment 

e) Sales Selector 

/) Airport- Vernon Study of Values 

g) Guilford-Zimmerman Temperament Survey 

h) Strong Vocational Interest Test 

Another interesting view of tests may be taken by noting briefly 
the way in which testing materials are presented. In the fields of in- 
telligence or mental ability, for example, a variety of methods has 
been used. During World War I, the U.S. Army employed nonverbal 
(the beta test) and verbal (the alpha test) means for this purpose. 
Since then, the experiments have been innumerable. Test materials 
include such forms as the following: multiple-choice word sentences, 
arithmetical expressions, pictures, and figures; disarranged sentences 
or displays; matching and nonmatching words or numbers; similarities 
and opposites of various kinds; and incompleted sentences that must 
be completed. 

It is well to note that students of the subject are aware that intelli- 
gence is not a simple characteristic. Rather, it is perhaps irrevocably 
mixed up with other phases of human characteristics, such as learning, 
experience, background, personality, mechanical ability, executive tal- 
ent, sales ability, and interest. Hence, in testing intelligence, a pure 
score is never obtained but is tainted by the other characteristics. 

Perhaps a good view of types of tests may be obtained by briefly 
describing some common tests and what they are testing: 15 

1. Tweezer dexterity tests are used to determine whether a candidate pos- 
sesses sufficient finger performance and control to handle small parts effi- 
ciently and without undue fatigue. 

2. A test of mechanical ability may be obtained by checking the speed with 
which a candidate can assemble oddly shaped jigsaw blocks. 

3. Another test used to determine mechanical ability is the spatial relations 
test. This serves as a measure of a candidate's ability to visualize the shape 
of physical objects. 

4. Tests of machine skill have been designed in which the operator is 
checked, first, for speed and accuracy in controlling two cranks turned 
at different speeds and in different directions, and, second, for hand-eye 

14 Erwin K. Taylor and Edwin C. Nevis, "The Validity of Using Psychological Selec- 
tion Procedures," Personnel, November, 1953, pp. 187-89. 

15 R. S. Uhrbrock, "The Expressed Interests of Employed Men," American Journal of 
Psychology, July, 1944, pp. 317-70; October, 1944, pp. 537-54. 



L 


I 


D 


L 


I 


D 


L 


I 


D 


L 


I 


D 



198 PERSONNEL MANAGEMENT 

co-ordination in turning a crank while following with the eyes a line 
drawn on a revolving drum. 

5. A test used to screen candidates for fine assembly work has been based 
upon dexterity in handling small parts. 

6. Inspection tests are usually made up of sample jobs which check visual 
acuity and finger dexterity. 

7. Technical intelligence has been measured by the use of pictorial multiple- 
choice questions, as have mechanical comprehension to understand various 
types of physical relationships. 

8. A classification and placement test designed to measure individual per- 
formance in twelve basic skills of seeing is incorporated in a testing in- 
strument called the "Ortho-rate." 

9- In checking the interests of people, the samples following are illustrative 
of the types of tests which have been employed. 

a) Below are names and accomplishments of persons who have attained 
fame. If the life and work of a man interest you, circle the L before 
his name; if you are indifferent to his accomplishments, encircle the 
I; if you dislike the type of activity he stands for, encircle the D. 

1. Johann Gutenberg — movable type for printing presses 

2. Harvey Allen — author of Anthony Adverse 

3. George Corliss — valve gear for steam engines 

4. Thomas Edison — incandescent lamp 

b) Below are listed several paired occupations. Suppose that each occu- 
pation pays the same salary, carries the same social standing, and offers 
the same future advancement. Place a check (\/) in front of the 
one occupation of each pair which you would prefer as a life work. 
Be sure to mark one of each pair. 

1. Research chemist 6. Sales manager 
Factory superintendent Advertising manager 

2. Budget director 7. Research chemist 
Sales manager Personnel director 

3. Office manager 8. Factory superintendent 
Construction engineer Office manager 

4. Research chemist 9. Design engineer 
Sales manager Sales manager 

5. Personnel director 10. Budget director 
Office manager Design engineer 

OPERATING A TESTING PROGRAM 

Since it has been impractical to analyze even a part of all tests in use, 
some useful suggestions regarding any tests may be provided by com- 
menting upon: (1) staffing and organizing a testing program, (2) 
recording and interpreting test results, and (3) measuring the ac- 
curacy of tests. 

1. Staffing and Organizing. Undoubtedly a most important 
requirement of a good testing program is that of assigning it to com- 
petent personnel. Immediately there comes to mind the psychologist, 



TESTS 199 

trained in the theory of tests, their construction, their uses, and their 
meaning. When possible, such a person should be given responsibility 
for operating the testing program. However, it is not always possible 
to utilize the services of a psychologist. In such instances, there is no 
reason why it is not possible to assign some individual with the required 
potential and have him study in this field himself. Many a case is on 
record of executives who have become interested in testing and, after 
years of study and experimentation, have performed very creditably in 
constructing and giving tests and interpreting tests results. 

From an organizational point of view a number of suggestions is 
in order. To begin with, the top executives must be convinced of the 
desirability of testing. Until and unless they are "sold," the battle with 
the lower levels of an organization will be eventually lost or hard-won. 
Hence it is good practice, first, to convince top management of the 
value of testing; second, to bring it actively into the developmental 
stages of the program; and, third, to keep it informed of progress by 
means of reports illustrating the success of the testing program. 

Those on lower levels of an organization will also have to be con- 
vinced of the usefulness of testing. Unless one wants a forced accept- 
ance — and consequently an unstable position — it is best in these levels 
to go slowly. Usually only a department or two should be selected as 
the area of installation. Results here should then be so self-apparent 
that the program will expand of its own accord. The following state- 
ment illustrates convincingly how this actually works out: 

By the third year we had developed enough confidence in one or two depart- 
ment heads so that they were willing to allow us to test some of their employees. 
After a time one of these department heads sent us, gradually, most of the 200 
employees in his department, and subsequently he never made a promotion or 
transfer without consulting me and inquiring about test indications. 

One of the best ways to commence testing employees is to appeal to them 
for assistance in helping to develop standards for selection of new workers in 
the same occupation. If tactfully done and if the support of the supervisors 
affected has been secured, no trouble should ordinarily result. 

The influence of tests on selection and promotion was thus being extended 
and gave us an increasing number of opportunities to "sell" supervisors and 
employees on the value of tests. This job of selling is never finished. By now 
we are not merely tolerated; our testing program is taken for granted in most 
departments, and in some it is regarded as an essential aid to the supervisor. 
There are departments, nevertheless, where, even yet, testing employees is im- 
possible. Such departments challenge us to further effort in establishing clearly 
the value of psychological methods, including testing. 

After about three years we reached the point where employees began to come 
and ask to be tested, and several department heads asked us to test all their 



200 PERSONNEL MANAGEMENT 

clerks. Sometimes this was to gain a better understanding of their own strong 
and weak points; sometimes it seemed to be merely an attitude of approval. 
We are now constantly being asked to recommend men for promotion and 
encouraged to test them to help our decision. 16 

This need to "sell" testing should not be considered satisfied, once 
the program is accepted. A continuous and unending program of selling 
must be followed to maintain it at its highest possible stage of develop- 
ment. 

Organizationally speaking, there is no reason why unions, too, can- 
not be consulted in connection with the use of tests. Although unions 
have not displayed much interest in this subject, there are cases in which 
management has worked with unions in applying tests in cases of 
selections, transfers, and rehirings. Tests are used as an aid in connection 
with other devices to decide on such matters as employee placement, 
with union consultation and consent. 

2. Recording Test Results. Another operational aspect worthy 
of consideration is that of recording test results. Such records can be 
expressed simply in arithmetical or verbal terms, or they may be dis- 
played graphically. Arithmetical or verbal terms have simplicity and 
ease of recording in their favor, but they lack the desirable character- 
istic of visualization. For example, Figure 37 illustrates the graphical 
method of displaying test results in regard to visual measurements. The 
"profile," or line connecting various test scores, quickly and clearly 
reveals to the reader the co-ordination of given operators as compared 
to desirable limits. 

On a broader scale, the value of profile recording may be seen in 
Figure 38. Here test scores on nine tests are recorded. The tests were 
as follows: (1) pinboard, (2) right-right turning, (3) special inspec- 
tion, ( 4 ) case sorting, ( 5 ) visual perception, ( 6 ) controlled turning, 
( 7 ) right-left turning, ( 8 ) hand-foot co-ordination, ( 9 ) rhythm. The 
profiles of the four candidates shown in Figure 38 make it possible to 
draw conclusions much more quickly than if the scores had merely 
been expressed arithmetically. 

3. Measures of Accuracy of Tests. Tests are usually meas- 
ured in terms of their "validity" and "reliability." On the one hand, 
tests are obviously developed and designed to test something, e.g., in- 
telligence, temperament, finger dexterity, or reading ability. The de- 
gree to which a given test does this is a measure of its validity and 
is commonly expressed by means of the statistical device of coefficient 
of correlation. Simply, this refers to a measure of the degree to which 

16 Hay, op. cit., p. 27. 



TESTS 



201 



those who have high, average, and low scores also have high, average, 
and low production records, for example. On the other hand, a test 
which is supposed to measure something should yield approximately 
the same answer for the same person at different times (allowing for 
the memory factor and improvement on the job because of experience) . 
The degree to which a given test does yield consistently the same scores 

FIGURE 37. Visual Patterns Desirable for Electric Soldering Operations, and the Actual Score 
Made by One of the Employees in the Highest Hourly Rating Group. Scores in the Darkened 

Area Are Undesirable* 



VISUAL PERFORMANCE PROFILE 



FAR 



< 

5 VERTICAL 

§ LATERAL 

a. 


1 
2 


gg§3 | 2 3 4 


3 
5 


© 5 

6 @U8 9 


6 
10 


7 8 | 

11 12 13 










14 


15 


BOTH 
*Z RIGHT 
3 LEFT 
< UNAIDED 


3 
4 
5 






6 7 8 9 
6 7 8 Gj 
6 7 G) 9 


)2) 

10 
10 


11 12 13 
11 12 13 
11 12 13 


14 
14 
14 


15 
15 
15 


| 4 
| 4 


5 
5 


DEPTH 


6 


12 3 


© 


5 6 7 


8 


9 10 


11 


12 


COLOR 


7 


B 3 4 


© 


6 7 8 9 


10 


11 12 13 


14 


15 



NEAR 



^BOTH 
^ RIGHT 
3 LEFT 

< UNAIDED 


1 I 






H 9 


3- 
10 

10 


j(u) 12 
11 12 
11 12 


13 
13 
13 


14 
14 
14 


15 
15 
15 


2 E 

3 ■ ^ ^ 




| 7 
| 7 


8 Gf 

jj)9 


S VERTICAL 

O 

X LATERAL 

BL 


4D 

5 P^ ' 


2 3 4 5 


4 
6® 


5 
8 9 


6 

10 


7 


8 | 






ii B 









* Source: N. Frank Stump, "Vision Tests Predict Worker Capacity," Factory Management and Maintenance, 
February, 1946, pp. 121-22. 



is a measure of its reliability and is also commonly expressed as a co- 
efficient of correlation. 

An example of a simple determination of validity is provided by the 
following case of selection of office employees: 

After administering five different tests we found two which predicted success 
to a fairly high degree. The critical score on each test is such that, of the 20 best 
operators, 15 made good scores; and of the 20 poorest, only 5 made good scores; 
or, in other words, if we had discharged all the operators with scores below the 
critical point of either test, we would have lost 25 per cent of our best operators, 
but no less than 75 per cent of our poorest. 



202 



PERSONNEL MANAGEMENT 



This is not as high a degree of correlation between test scores and perform- 
ance as is often obtained; we believe we can improve it by further experimenta- 
tion with other tests. 

The correlation indicates, however, the probability of a very substantial 
degree of success in selecting operators who will subsequently prove satisfactory. 
As a matter of fact, of 5 operators employed in the last three years as beginners, 
that is, without experience, 4 are now among the 20 best girls and only 1 is in the 
lower group. That one is well up in the lower 20 and, we think, will move higher 
after a little more experience. 17 

FIGURE 38. Inspection Test Profile* 



ANNE SMITH 

CAROLINE JONES -- 

BERNICE BROWN 

DOROTHY ROBINSON 

100 
90 
80 
70 
60 
50 
40 
30 
20 
10 



DATE 2.J4-/33 



— ( 


: ' 


v / 

*\ /' 
* \ / 
\ Y 


^. 


,/ 


\ 
\ 


> 

* 










"~~" \ 








sV 




\ 








AVERAGE 


\ 










^ 


/ j 


) 







\ 

\ 

\ 

\ 

\ 




x 

X 

N 


/ 
/ 

/ 
/ 
/ 
/ 

/ 
( 




.< 




- 


— 








i 




t ,i 


>* 




~ 


— 




*•< 




>• 


•( 


i" * 




*T 


» 





I IE 

SPEED 



HL IE 31 

INSPECTION 



-\7T •yrr ~vnT 

DUAL H-F 



RHY. 



* Source: C. A. Drake and H. D. Oleen, "The Technique of Testing," Factory Management and Maintenance, 
March, 1938, pp. 77-78. 

An example of a simple determination of reliability is provided by 
the following case in which pupils who had been given a test in blue- 
print reading were later retested: 

Months later, people were retested at random, the same test being used. There 
was an improvement in the scores, but not more than 7 points. Seven points out of 
100 is a negligible figure which could be charged to remembrance or practice. 
Theoretically, we could say that each person hit his own level again on a retest, 
and that the test was reliable. Or, in other words, that each time it was used one 
could depend on getting accurate results. The reliability of a test can be bettered 
by lengthening it. This should not be done to extremes because the element of 



Hay, op. cit., p. 32. 



TESTS 



203 



writing fatigue may void any good results. Employment tests should not run 
more than 30 minutes to be practical. 18 

A graphical illustration of the accuracy of tests is shown in Figure 
39. Here the relationship between test scores for inspectors and meas- 
ures of their success are summarized in table form. By drawing lines 
to denote areas of good relationship, it was found that 95 per cent of 

FIGURE 39. Correlation of Ratings and Test Scores* 



CORRELATION ANALYSIS 

No. of Men Studied_£££ 

Department ^«a£M^>ec&cn^ 



THIS GRAPH SHOWS: £ 

Correlation between personnel o £• 
test results in S/ia^e- ^ tj 

ond work performance, as £ <^ 

measured h y a^cuAa^ *- 



Good relationship between lesl 
scores and performance 








I 




1 




/ 

/ 


3 


3- % 

6 f 












6 

1 


2 


I 


,4 7 








/ 


6 


2 


•f 


S 


IS" if 






/ 




1 


7 


2 


i e, 


/ I 




/ 










/ 




1 


/ 










1 






I 
















r 








































1 2 


Low 


i A 
/ 
/ 


\ 

PERSO 


> 

MNEL TE 


ST SCOf 


t 

£S 


i 


3 10 
High 



/- 95% SHOW GOOD RELATIONSHIP 
< BETWEEN TEST SCORES AND 
PERFORMANCE 



* Source: Robert E. Kline, "We Know Our Employment Tests Match Man and Job," Factory Management 
and Maintenance, September, 1949, p. 122. 



employees who received acceptable test scores turned out to be ac- 
ceptable inspectors. 

RULES OF USING TESTS 

Perhaps this discussion of testing can be best summarized by review- 
ing some rules of good testing practice. 

From an operational point of view, several suggestions are in order. 
First, it is highly desirable to make careful job and position studies as a 
basis for building tests. Job analysis is essential in order to determine 
the skills, aptitudes, or other characteristics for which tests must be de- 

18 R. W. Gillette, "Tests Help You Hire Right," Factory Management and Mainte- 
nance, October, 1941, p. 80. 



204 PERSONNEL MANAGEMENT 

signed. Until this information is obtained, the selection or develop- 
ment of tests can only be based upon guesswork. 

Next, it is generally agreed that tests should be selected or devel- 
oped with a view to particular jobs in a particular company. Although 
there are tests which may have general reliability, such as the general 
intelligence test, specific adaptations are invariably called for. Local 
conditions, variations in jobs ( even with the same title ) , and differences 
in company policies and operation methods are sufficient reason for 
making individual adaptations. 

Another operational principle is that reliance should not be placed 
solely upon tests in reaching decisions. Tests are most useful when they 
are given a part in the task of selection, placement, or training of em- 
ployees. Other devices such as application blanks, interviews, and rating 
scores should be given a prominent role. There is a danger that one's 
initial enthusiasm for tests may tend unwarrantedly to relegate these 
other instruments to a small role. When this first flush has passed, there 
is equal danger that tests may be discarded for failing to provide "all 
the answers." 

Other principles of test usage also deserve mention. Thus, it is well 
to establish upper limits of test scores beyond which a person's accept- 
ability is in question. There is as much possibility of hiring a person 
who will become dissatisfied if he is too intelligent or proficient, as of 
hiring one who is too dull. Also, the nature of the significance of test 
scores and of all aspects of testing is so involved that it is not desirable 
to expose test methods or scores to those who do not understand them. 
The personnel department should be the keeper and interpreter of tests. 
Others certainly have an interest in them, but that is an interest of use 
and not of operation. Hence the expert should be recognized as the 
authority of operation, respected for it, and able to explain its ramifi- 
cations and to answer all pertinent questions. "Self-medication" should 
be avoided. 

It is also important to use correlation figures with care. A high 
validity rating does not mean that the given test can be used with im- 
punity. For example, an individual may score low on a test of high 
validity. Yet through high personal motivation he may more than make 
up for, let us say, a minimum of technical skill. On the other hand, a 
test with a low validity rating may nevertheless give a valuable clue 
to a particular applicant's strength or weakness. These warnings are in 
addition to that already given to the effect that tests are best used in 
connection with other instruments of selection, placement, or promo- 
tion. 



TESTS 205 

An essential principle of installing testing is that the program be 
supported sufficiently and be given ample time to be worked out. A 
good program will, at the minimum, take a few years to put in opera- 
tion. Unless adequate time is allowed and resources provided, the re- 
sults will not be as satisfactory as desired. Yet this plea for time and re- 
sources does not mean that the outlay will be expensive. Most com- 
panies that have gone into such a program do not have to spend more 
than several dollars (at the most) for each employee tested. The im- 
provement in selection, training, and placement results is more than 
adequate to offset such expenditures. 

In the final analysis, tests must be judged in terms of their contri- 
bution to the solution of problems of selection, placement, and training. 
Such judgments might not be too difficult to arrive at, were it always 
possible to try out various tests by comparing test scores with the pro- 
duction records of employees. But unlimited resources are seldom pro- 
vided for such research. As a consequence, most tests must be devised 
and evaluated within time limits and budget expenditures that do not 
allow all the latitude that might be desired. 

QUESTIONS AND PROBLEMS 

1. If testing is, among other things, a sampling process, how does one know 
when one has an adequate and representative sample? 

2. How would you explain the rather infrequent use of tests in industry? 

3. Why does a "profile" increase the effectiveness of testing programs? 

4. What are the fundamental assumptions that underlie the use of psychologi- 
cal tests in employment? 

5. Look up the meaning of the words "diagnostic" and "prognostic." What 
relation do these terms have to the possible use of tests? 

6. How do you explain the fact that, relatively speaking, tests do not enjoy 
wide usage although much has been written about them during the past 
thirty years? 

7. Assume that an applicant for a job receives a score of, let us say, 69 on a 
battery of tests for which the passing grade is 70. What would your decision 
be in this case, and why? 

8. Explain the difference between tests designed to measure acquired skills and 
those designed to measure aptitude. 

9. Discuss the usefulness of a general intelligence test as opposed to a "specific 
characteristic of intelligence" test. 

10. What would you conclude about a candidate who made high grades on some 
and low grades on other parts of a battery of tests? 

11. What relationship is there between organization structure and the develop- 



206 PERSONNEL MANAGEMENT 

ment and use of tests? How does this relationship change as a company 
grows from small to very large size with decentralized factory operations? 

12. Some companies have experienced strong objections from line supervisors 
when attempting to introduce a testing program, and others have gained 
immediate co-operation. How would you explain the difference in accept- 
ance by supervisors? 

13. Visit a few companies that are using tests, and write a report covering the 
following points: How long did it take them to get their program of test- 
ing to work with reasonably good results? What were the major obstacles 
they had to overcome? What pitfalls do they suggest must be watched 
for? Specifically what tangible proof do they have of the effectiveness of 
testing? 

14. Why is it desirable to establish upper as well as lower test scores as limits 
of hiring? 

15. What is the relation of testing to job analysis? 

16. What qualifications should a person have in order to be permitted to use 
test scores? To interpret test scores? To develop tests? 

17. Indicate what is meant by "validity" and "reliability" of tests. Describe how 
measures of validity and reliability may be obtained. 

18. Assume that a given test is revealed to possess only fair validity and reli- 
ability. Indicate what factors, other than the test itself, may be at fault. 

19. In order to minimize misuse of tests, what advice would you underline in 
preparing a report to a company that is proceeding to install a new program? 

20. Why are psychological tests, properly used, examples of scientific manage- 
ment? 



CHAPTER 



11 



Transfers and Promotions 



SCOPE OF TRANSFERS AND PROMOTIONS 

Many vacancies are filled by internal movements of present employees. 
These movements are termed "transfers" and 'promotions/' The former 
term refers to changes in which the pay, privileges, and status of the 
new position are approximately the same as of the old. In the case of 
promotions, the new position commands higher pay, privileges, or status 
as compared with the old. The simplicity of these definitions belies the 
many difficulties that stand in the way of a good program of position 
changes and the undesirable results that flow from a poor program. 
Hence it is important to know the purposes of such programs, their 
operational aspects, their practical limitations, and the requirements of 
a good procedure of transfers and positions. Inasmuch as transfers and 
promotions have much in common, they will be considered here to- 
gether. Since these subjects are also influenced by the factor of seniority, 
attention to this is also directed in this chapter. 

PURPOSES 

The primary purpose of a transfer or promotion is to increase the 
effectiveness of the organization in attaining its service and profit ob- 
jectives. When an employee is placed in a position in which he can be 
most productive, chances for successful results of the organization for 
which he works are consequently increased. It should be the aim, there- 
fore, of any company to change positions of employees as soon as their 
capacities increase and vacancies warrant. Unfortunately, this is not 
always done for reasons which will be noted later in this chapter. It is 
of interest to note here that failure to utilize the highest skills of em- 
ployees sometimes becomes a matter of concern outside the company. 
During World War II, when such failures occurred, permission was 
granted employees to leave their jobs and secure employment where 
their highest skills would be utilized. 

Another significant purpose of transfers and promotions is of a per- 

207 



208 PERSONNEL MANAGEMENT 

sonal nature. Job changes provide an opportunity for present employees 
to move into jobs that provide greater personal satisfaction and pres- 
tige. Being transferred to a new job may open up new avenues of ad- 
vancement or add the spice of variety to daily routines. Often, too, 
prestige is a factor, in that the person transferred is publicly recognized 
for his accomplishments. Of course, not all employees want to be trans- 
ferred or promoted. Many like the assurance of a settled security, but 
most of them like to feel that opportunities for transfer or promotion 
are available. 

OPERATIONAL ASPECTS 

Transfer and promotion systems are either informal or formal. 
Under the informal plan decisions as to who should be transferred or 
promoted usually await the occurrence of a vacancy. Moreover, the bases 
upon which decisions are made vary from vacancy to vacancy and from 
time to time. As a consequence, no one knows what his status is or is 
likely to be under this system. However, it is simple, in that nothing is 
done about vacancies until they occur. Owing to this apparent simplicity, 
informal plans are undoubtedly used more frequently. 

The informal plan gives way, as the losses in morale flowing from it 
become evident, to some formal statement of program and policy. The 
plan may simply be based upon seniority as the test for determining 
who shall be transferred or promoted; or it may involve a complete 
system of job analysis, merit rating, and filing of records. In this sec- 
tion, attention will be directed to the details of a more or less complete 
formal plan, and then seniority plans will be discussed. 

As already suggested, a plan of transfers and promotions which pre- 
tends to be complete must contain the following: 

1. A plan of job relationships 

2. A plan and policy for selecting appropriate employees 

3. A plan of records and reports 

PLAN OF JOB RELATIONSHIPS 

The basic step in building a plan of transfer and promotion is that 
of determining the horizontal and vertical relations between jobs. Thus 
for each job a schedule must be provided, first, of the jobs to which 
transfers may be made and, second, to which promotions may be made. 

Job analysis is an indispensable tool for securing the information 
upon which such determinations can be made. It provides information 
on the skill, experience, training, responsibility, and environmental fac- 
tors involved in each job. When such information has been obtained, 



TRANSFERS AND PROMOTIONS 209 

FIGURE 40 



JOB SPECIFICATION 

Job Title: MOLDING MACHINE OPERATOR Department: MAKE-UP 



EMPLOYEE QUALIFICATIONS 



MALE: X FEMALE: ENGLISH S: X R: X W: X Race: W 



EDUCATION : Public High X or Baker's 

EXPERIENCE: 2 months Pan Greaser and Molding Machine Helper. 

PHYSICAL REQUIREMENTS: No contagious or venereal disease; pass physical 
examination of food handler; normal eyesight. 

MISCELLANEOUS: Worker must be careful, honest, co-operative, dependable, 
and alert. Must have fine sense of touch and good memory. Must have 
ability to move hands rapidly and skillfully to twist pieces of dough. 



CONDITION OF WORK 


Machine 


X 
X 


Hand 
Sitting 


Heavy Light 
Stooping 


Medium X 


Stand 


Hazard X 


Rough 


X 


Accurate 


Inside X 


Outside 


Dusty 


X 


Hot X 


Cold Dirty 


Greasy 


Quick 


X 


Slow 


Humid 


Sticky X 


Miscellaneous: 








EMPLOYEE INFORMATION 



RATE OF PAY: 70c hr.; time and Vz for overtime. 

HOURS OF WORK: 8-hr. day, 48-hr. week, Sunday to Friday; longer hours 
overtime. 

WORK SHIFT: 1 P.M. to 9 P.M. 

VACATION: One year, one week; five years, two weeks. 

PROMOTIONS: May be promoted to Divider Man. 

May be promoted from Pan Greaser and Molding Machine Helper. 
May be transferred to Cake Baker apprentice or Wrapping Ma- 
chine Helper. 

PERSONAL EFFECTS REQUIRED: White uniform, hat, and apron. 

DUTIES 



1. Under general supervision of Divider Man to properly mold all bread into 
cylindrical form. 

2. To uniformly twist pieces of dough together. 

3. To put into pans twisted pieces of dough. 

4. Supervise Pan Greaser and Molding Machine Helper to see that proper types 
and amount of pans are greased prior to beginning of run and to see that 
panned bread is properly racked. 



210 



PERSONNEL MANAGEMENT 



study of jobs can be undertaken to determine which jobs are related 
horizontally and vertically. How this task is made easy by job analysis 
is illustrated by the job specification shown in Figure 40 (p. 209). 
Based upon job analyses, this specification of a selected job in a mecha- 
nized bakery shows immediately, among other things, that a molding 
machine operator may be promoted to a divider man. Furthermore, the 
lines of promotion to the operator's job are also noted. On the other 
hand, when it comes to transfers, the operator may be moved to a cake- 
baker helper or wrapping machine helper. 

FIGURE 41. A Progression Chart* 




i Sizer / 



Overseer 

Second Hand 

Overhauler 

Overhauler Helper 

Does own creeling 



\i Spinner ] ( Hoving ) 




* Soui 



"Training New Employees Quickly," Textile World, July, 1943, p. 60. 



It should be noted that such job studies do not imply that the lines 
of transfer and promotion are unbending. If it happens that a particu- 
lar person filling a given job has the qualifications, as often happens, to 
jump into another line of transfer or promotion, this should be per- 
mitted. However, this is a matter of personal qualifications and does 
not destroy the validity of natural job relationships. 

When job relationships have been fully explored in this manner, it 
is desirable to construct a promotion chart and sometimes a transfer 
chart. Samples of charts of related jobs are shown in Figures 41, 42, and 
43. Such diagrams may appear to be complicated, but study of them 
quickly provides an answer regarding the jobs to which promotions or 



TRANSFERS AND PROMOTIONS 



211 



transfers can be made. Moreover, such charts are superior to the unde- 
fined images of job relationships that exist merely in the minds of 
executives, on the one hand, and subordinates, on the other. There can 

FIGURE 42. Upgrading Sequence Chart for Job Classifications 
in a Cotton Textile Plant* 



Carding: 
Section Hand 

t 
Card Grinder 

Card Tender 

Card Stopper 

Slubber Hand 
and Fly Frame 
Tender 
t 

Can Turner 

Transfer Hand 

Draw Frame 
Tender 

Oiler 



Spinning: 
Fixer and Section 
Man 

DoHer 

t 
Sizer 

t 
Spinner 

Roving Man 

Yarn Man 

Band and Idle 
Pul. Man 

Spindle Oiler 

Oiler 

Cleaner 



Upgrading sequence 
chart for job classifications in 
a cotton textile plant. 



Spooling: 

Section Man 

Section Man 

Helper 

t 
Spooler Hand 

Yarn Man 

Piece Rocker 

Yarn Cleaner 

Tailing Machine 
Hand 

Warp Twisting. 
Warping and 
Winding: 
Section Man 

Twister Tender 

Twister Creeler 

Twister DoHer 

Oiler 

Reel Hand 
Warper Tender 

t 

Warper Helper 

Warper Creeler 
Winder Tender 
Winder Holper 



Filling Twisting: 

Section Man 

DoHer 

Creeler 

t 
Filling Helper 



Slashing: 
Section Man 

Slasher Tender 

f 
Size Man 

Slasher Helper 

Beam Man 



Beaming: 

Beamer Tender 

Beamer Helper 



Drawing-in and 
Tying-in 
Section Man 

Drawing-in Hand 
Drawing-in Helper 
Tying-in Operator 
Tying-in Helper 



Weaving: 
Loom Fixer 

Weaver 

Tying-on Warps 

Laying-up Warps 

Pick-out Hand 

Smash Hand 

Battery Hand 

Taking-oH Cloth 

f 
Filling Hauler 

Oiler 

Cloth Hauler 

Loom Blower 

Loom Cleaner 

Overhead Cleaner 

Baling. Trading. 
Burling: 
Folder Hand 

Brander and Sewer 

Press Booker 

Head Pressman 

Press Helper 

Baler and Sewer 

Grader 

Remnant Hand 

Calender Hand 

Burler 



* Source: "Training New Employees Quickly," Textile World, July, 1943, p. 60. 

be much room for disagreement in the latter system of establishing job 
relationships. 



SELECTING CANDIDATES FOR PROMOTION 



The next important step in building a transfer and promotion plan is 
that of determining which employees are worthy of consideration when 



212 



PERSONNEL MANAGEMENT 



vacancies occur. The significance of this step, at least to the employees, 
simply cannot be overestimated. After all, in their eyes, this is the cru- 
cial test of the company's transfer and promotion plan. Hence every 
care should be exercised to select the best-qualified employees and to be 
prepared to justify the selections should any questions be raised. Where 
a union is involved, some agreement will usually be reached regarding 

FIGURE 43. Upgrading and Transfer Chart for Machine Shop and Tool Department 





FOREMAN 






1 






t 


1 




















TOOL AND DIE MAKER 
(CLASS A) 








X „ 












1 TOOL AND DIE MAKER 




i MACHINIST II 
(CLASS A) 




TOOL HARDENER 
(CLASS A) 


S ( CLASS B ) 




X 












+ 


DIE MAKER II 
(CARBOLOY) 




ANNEAL ER 


j 


k 














MACHINIST II 
(CLASS B) 
















t ' 


t 














1 


TURRET LATHE OPR. 
(CLASS A) 




ENG. LATHE OPR. I 
(CLASS A) 




INT GRINDER OPR. 
(CLASS A) 


T ' 


* 








♦ 
















L 




























f TURRET LATHE OPR. 
I (CLASS B) 




TOOL CLERK 






INT. GRINDER OPR. 
(CLASS B) 


1 1 

-UPGRADING ■ 




t t 




1 




t 




"J 


i 


1 






OOL CHASE 


r : 


LABORER, 
(MACHIN 


PROCESS 
E SHOP) 








"=TRy 


WSFER 


FROM A 


NOTh 


ER 


DEP 


T. 







the relative weight to be given to merit and to seniority; this subject is 
discussed later in this chapter. 

Perhaps the best plan in this connection is to have a good, over-all 
procedure of employee evaluations. The quantity and quality of various 
aspects of each employee's performance should be measured periodi- 
cally. This evaluation should pertain not only to the output of work 
but also to intangible aspects of performance. For example, such fac- 
tors as co-operation, ease of supervision, willingness to accept responsi- 
bility, ability to get along with others, and degree of initiative should be 



TRANSFERS AND PROMOTIONS 213 

determined. This, of course, calls for some plan of merit rating, which 
subject is discussed in the next chapter. 

The plan of employee evaluation should include an arrangement for 
consultation and perhaps vocational guidance. By discussing a person's 
strong points and weak points before vacancies occur, a two-edged 
weapon is employed. Those who are ambitious can get suggestions as 
to how they should seek to improve themselves. On the other hand, a 
record of such discussions can be cited to those who did not get a de- 
sired transfer and who failed to follow suggestions. In other words, by 
using the device of consultation, it is possible to forestall serious griev- 
ances by impressing upon the minds of employees what steps they must 
take to merit consideration for job vacancies. When discussions with 
employees take place only after transfers or promotions have not been 
received, it is difficult to convince the disgruntled employees that they 
were fairly treated. This is an illustration of the principle that, to be 
acceptable, standards should be discussed before as well as after use. 

RECORDS AND REPORTS 

A third important step in building a transfer and promotion plan is 
that of designing adequate records and reports. Unless procedures are 
available for keeping and relating information discussed in the first two 
steps, the equity and effectiveness of the plan will suffer. The system 
should include the following: 

1. Forecasts of job vacancies 

2. Central reporting of vacancies 

3. Locating qualified employees 

4. Notification of all parties concerned 

5. Follow-up of transfers and promotions 

1. Forecasting Vacancies. Although few companies follow 
the practice, it is highly useful to determine how many vacancies are 
likely to occur during coming periods on various jobs. When such fore- 
casts are available, advance preparations can be made to find appropriate 
employees to fill them. As a consequence, the stability of the organiza- 
tion can be maintained. Moreover, a good picture of the number of 
possible vacancies will minimize the danger of "overselling" present 
employees on the possibilities of advancement. It is indeed destructive 
of morale when employees are led, consciously or unconsciously, to ex- 
pect job changes that do not materialize. 

Such forecasts are not too difficult to make, provided that records of 
turnover and expected plant operations are maintained. As noted in the 
chapter on "Manpower Requirements," it is then possible to estimate 



214 PERSONNEL MANAGEMENT 

with a high degree of accuracy how many vacancies will have to be 
filled. For example, in a factory that has forty supervisors at present, 
turnover of supervisors has been 10 per cent annually and increases in 
production are expected to increase the supervisory force by 5 per cent; 
hence six vacancies will have to be filled in the supervisory ranks during 
the coming year. When information on vacancies is established in this 
manner, steps can be taken in advance to develop the needed number 
of replacements. Moreover, there will be a minimum error in the direc- 
tion of overhiring at the lower levels. In other words, hiring at the lower 
levels should seek a proper proportion, but no more than needed, of 
promotable candidates. 

Another effective way of forecasting vacancies is to show ages of 
executives on the organization chart. This can be done graphically by 
using different colors for different age groups; e.g., red for the ages 50 
and over, orange for 40-49, blue for 30-39, green for 20-29, and 
brown for 19 and under. Such an organization chart will immediately 
show the general areas which may be out of balance in terms of age 
groups and in which steps should be taken to provide for transfers or 
promotions. In what areas training of executives for transfer and promo- 
tion should be undertaken may also be disclosed. 

2. Reporting Vacancies. Central reporting of vacancies is an 
indispensable essential of a transfer and promotion procedure. Unless 
a specifically designated unit is informed of all vacancies, the inevitable 
will happen — vacancies will be filled from the outside rather than the 
inside. When this occurs, the confidence of employees in the promises 
of the company is destroyed. The procedure which suggests itself here 
is, first, to have all hiring done on a requisition basis and, second, for 
all requisitions to pass through the hands of a transfer and promotion 
section in the employment office. In this way, requisitions can be re- 
viewed with an eye to filling vacancies from within before outside 
sources of supply are explored. This may result in some delay during 
rush periods, but it is a cost well worth paying when contrasted with 
the increased morale and decreased grievances which are brought about 
thereby. 

3. Locating Candidates. Perhaps the type of record that is 
hardest to maintain in this connection is that of employees qualified and 
worthy of transfer or promotion. It is scarcely practical to operate a 
record of an indefinite number of qualifications. Hence the better plan 
is to keep a personal history record of each employee and then to de- 
vise some means of searching through the records to find the best can- 
didates for particular vacancies when they occur. This is a formidable 



TRANSFERS AND PROMOTIONS 



215 



task unless simplified methods of filing are employed. As an example, 
qualifications of each employee may be transcribed onto cards, which 
may be sorted mechanically or manually. Punched cards may be sorted 



EMPLOYEE NO, 

NAME 



FIGURE 44. Employee Information Card 

EMPLOYEE INFORMATION CARD 



SEX = MALE 



a 



□ 



COLOR = WHITE 



D 



□ 



□ 



DATE OF BIRTH. 



EMP STATUS = REG 



a 



□ 



imf o 



a 



RELIGION = PROT 



a 



a 



MARITAL STATUS = MARRIED 



a 



D 



a 



n 



D 



NO DEP CHILDREN Q Q O O O RELATIVES IN CO = YES Q 



□ 



D 



— 1 T 

□ 1 OTHER □ RESERVE = YES D NO O 



MILITARY SERVICE = WORLD WAR ONE 



□ I 



WORLD WAR TWO 



D 



o D 



a 



D EMP CLUBS = GASCO D THREE 



Q OTHER □ VETERANS O 



EXPERIENCES OR SKILLS = CLERICAL 



□ 



MECHANICAL 



□ 



□ 



SPECIAL TRAINING = DEPARTMENTAL 



□ y 



a 



D 



SUPERVISORY 



D| OTHER D 



D OTHER O 



i 2 3 — 4 b 1 1 7 3 3 5 1 1 2 3 3 5 5 7~K 

lost time D D DDD auto O O O O O other nnnnnnDn 



COMPANY INSURANCE = YES Q NO Q HOSPITALIZATION * YES Q NO Q CREDIT UNION MEMBER = YES Q 



001 002 001 004 005 DDT 007 COS 533 OTO" OTT 0T2 ' 

ABSENTEEISM = DAYS = Q Q Q Q Q Q Q Q Q Q Q Q ANY NO 



PUNCH CARD OPERATIONS COMPLETED DATE 



SEPARATION INFORMATION 
RESIGNED 

OtSLIKED OUTSIDE WORK , 

DISLIKED INSIDE WORK I _ 

OlSUKED SUPERVISOR 2. 

DISLIKED FaLOW EMPLOYEE . . J. 

OlSUKED BATE Of PA* . . 4. 

DISLIKE© WORKING CONDITIONS ..-..__. i. 

DISLIKED TYPE OF WORK ... * . 

OlSUKED PROMOTIONAL OPPORTUNITIES I. 

BECAUSE Of LACK OF PROPER TOOLS . 8. 

OTHER REASONS WHAT ' 



RELEASED 

LACK Of WOMI _ _ .. 00. 

OlSHONEST _. _ . 01. 

WTOHCATION . . 02. 

LOAF OR SLEEP ON JOB . „_-___„_ 03. 

INADAPTABILITY . _ 04 . 

DESTRUCTION f COMPANY PROPERTY . ...05. 

DISLOYAL TO COMPANY ...............06. 

LOST INTEREST IN JOB ...... 07. 

UNSAFE PRACTICES ._ _.._.., 08. 

WOULD NOT FOLLOW INSTRUCTIONS _ , _ _ .09. 

WOULD NOT ACCEPT RESPONSIBILITIES ... . 10. 

OUTSIDE OISTRACTIONS. II. 

OTHER REASON = EXPLAIN 



WAS HIS WORK SATISFACTORY' .68 

WOULD YOU REHIRE HIM? . .... 69 

010 HE WORK OUT TWO WKS NOTICE' ... 70 

OOES MAN AGREE WITH THE REASONS 

REPORTED AS TO HIS SEPARATION' . 71. 

COULD THIS SEPARATION HAVE BEEN AVOIDED*. . 72 
DID HE LEAVE OUR COMPANY 

FOR ANOTHER JOB' . .......7J. 

WAS MIS ATTITUDE TOWARD THE 

COMPANY GOOD WHEN HE LEfT' . ...... .74 

WOULD YOU RECOMMENO HIM TO 

ANOTHER COMPANY' . „ 7S 

If NOT WHY» 



1 

YES 


2 
DOUBT 

fUL 


9 
NO 


















GENERAL COMMENTS. 



mechanically by means of tabulating equipment, or through manual 
methods as illustrated in Figures 29 and 30 (pp. 153 and 154). Figure 
44 illustrates one that may be sorted manually. By such means, it is 
possible to determine quickly whether any employees with the necessary 



216 PERSONNEL MANAGEMENT 

qualifications are available to meet the specifications called for by spe- 
cific job vacancies. 

Of course, a record should also be maintained of employees who 
specifically request or are recommended by their superiors for transfer 
or promotion. 

Another method of locating candidates is that of "job posting." Un- 
der this method, notice of vacancies is posted on bulletin boards and on 
the time clock or is announced through the company newspaper or some 
other form of communication. Such posting may be limited to the de- 
partment or division in which the vacancy occurs, or it may be posted on 
a company- wide basis. The notice may be posted for some limited time; 
e.g., a week or ten days, or it may remain posted until the job is filled, 
no matter how much time is needed. This practice of posting has grown 
out of union desires that present employees be given an opportunity to 
bid on good jobs before outsiders are given a chance at them. 

4. Authorizations and Notifications. Another important 
aspect of a procedure of transfers and promotions is that of proper 
authorizations and notifications. On the one hand, the central unit re- 
sponsible for locating qualified workers should not be permitted to ini- 
tiate transfers of its own accord. It should request superiors of qualified 
employees to authorize a recommendation or approval of transfer. This 
may require some "selling" on the part of the personnel department, 
but it is effort well worth while. Then, too, the personnel department 
should be ready to suggest replacements to the superior involved. If 
these things are done, there usually will be little difficulty in operating 
such a plan after its initial stages. After all, those who lose good men 
will also gain others. 

On the other hand, a system of notifying all those interested should 
be provided. The employee selected is usually best informed by his own 
superior. In that way, line authority is not divided. In addition, sub- 
ordinates are impressed favorably by executives who show signs of look- 
ing after the interests of employees. The new superior under whom the 
employee is to work should be notified by the personnel department, 
so that his approval may be obtained. In this way, the staff position of 
the personnel department does not intrude upon the authority of the 
department served. And, finally, notices of the change should go to the 
payroll department, personal history section of the personnel depart- 
ment, and any other sections that keep records of employees. 

5. Follow-Up. The final step of a good transfer and promotion 
plan is that of follow-up. It is well to determine how well the job 



TRANSFERS AND PROMOTIONS 111 

change has taken effect. Are the employee and the superior satisfied 
with the change? By means of a regular follow-up, say a month or two 
after the change, a brief interview with both parties would suffice to 
determine whether all is going well or whether some form of corrective 
action is in order. This form of follow-up is similar to that which is 
recommended for new employees. After all, the transferred employee 
is a new employee in his new job, even though he is an old employee 
to the company. Hence it is desirable to determine the correctness of 
the job placement in these cases, too. Some companies allow the follow- 
up to come from the employee himself in the form of a grievance or 
complaint. This practice assumes that all employees will complain if 
they are not satisfied, which is not always true. Moreover, it places upon 
the employee the responsibility for a function that is largely mana- 
gerial; and management should not shirk its responsibilities. 

REQUIREMENTS OF A GOOD PLAN 

From what has been said thus far, k can be seen that there are a 
number of tests which can be applied to determine whether or not a 
transfer and promotion plan is a good one. In the first place, the pur- 
poses of the plan should be definitely understood. It should, on the one 
hand, contribute to the attainment of the company's service objectives; 
and, on the other hand, it should make possible for ambitious and quali- 
fied employees the attainment of personal goals for advancement in pay, 
prestige, and privileges, or placement in desired working conditions. 
This twofold set of objectives should be recognized and their attainment 
encouraged. 

In the second place, the procedures and organization structure by 
which the objectives of the plan are to be attained should be carefully 
worked out. This should begin with a careful estimate of future va- 
cancies in various jobs; then there must be a study of jobs to determine 
the relationships which exist between jobs. Also, a plan for selecting 
appropriate employees should be established, which usually means some 
form of merit rating. Then, too, records and reports, upon which the 
information of transfers and promotions may be kept, should be de- 
signed. Finally, responsibility for the execution of the plan should be 
placed definitely upon some organization unit, preferably the personnel 
department. 

In the third place — and this has only been hinted at thus far — a plan 
can be called good only if it has the co-operation of the superiors in 
giving up employees qualified for transfer and promotion. After all, it 



218 PERSONNEL MANAGEMENT 

takes real understanding for a superior to agree to the loss of an em- 
ployee who is doing an excellent job in his unit. The effectiveness of 
his own organization unit is bound to decrease, for the time being, be- 
cause it is scarcely possible that the replacement will be as effective as 
the displaced employee. And when work is at a high-pressure stage, 
the reluctance to give up proved employees can readily be understood. 

Hence such reluctance must be overcome. The only lasting solution 
is to prove to those who lose good employees that they will gain by the 
loss. Two types of arguments are available. First, arguing negatively, 
an executive who stands in the way of transfers or promotions will soon 
become notorious for it, and the best employees will, if at all possible, 
keep clear of his department. As a consequence, the effectiveness of his 
department is bound to suffer. Second, arguing positively, a department 
that gains a reputation for good transfers and promotions attracts the 
better workers and hence has, by that factor, a higher effectiveness. Or, 
put in other words, a test of an executive is the quality of his subordi- 
nates; and this in turn depends in part upon the opportunities in his 
department. 

Finally, a test of any plan is the confidence which employees have 
in its fairness and equity. If the promises of transfers and promotions 
are greater than the fulfillments or if the most deserving employees are 
not selected, confidence of employees in it will not be gained. Without 
this ingredient, the objectives of the plan cannot be obtained, because 
the reward of job betterment is not available to motivate employees. 
Hence great care should be exercised to see that promises are met and 
the best workers rewarded. Moreover, interviews backed with facts 
should be had with any employees who feel that they were not dealt 
with fairly in particular transfers or promotions. If these precautions 
are heeded, there should be no reason for employees to lose faith in 
the plan. 

LIMITATIONS 

Whether or not, and to what extent, a transfer and promotion plan 
can be put into operation depends upon a number of factors. Obvi- 
ously, there must be sufficient vacancies to warrant investments in an 
involved plan. That is why a small company or one in which turnover 
is very low would be foolish to waste time and resources on a formal 
plan. The objectives to be gained would not be worth the effort. 

If there is danger of "inbreeding," a plan of filling the better posi- 
tions from within should not be adopted. In organizations where new 
ideas, initiative, and originality rate a premium, outside hirings are to 



TRANSFERS AND PROMOTIONS 219 

be preferred. Otherwise, replacements are bound to be made with em- 
ployees who know little more, if any, than those whom they replaced. 
The result is bound to be unsatisfactory in a highly competitive sit- 
uation. 

Again, a plan of transfers and promotions should be circumscribed if 
satisfactory horizontal and vertical job relationships cannot be readily 
established. Thus, where jobs in a factory or office differ radically, it 
may not be possible to establish job sequences which make it possible 
for a candidate to progress readily from one job to another. In such 
cases, a plan of training must be established so that those who deserve 
transfers or promotions can be prepared for job changes. 

Perhaps the most serious limitation upon transfer and promotion 
plans arises out of the difficulty of measuring the over-all qualifications 
of employees. When such factors as quantity and quality of output, co- 
operation, acceptance of responsibility, and aptitude to progress must 
be measured and weighed together, the task is time-consuming and diffi- 
cult. Moreover, those who are affected by the results of such measure- 
ments many not be able to understand the methods of measurement. As 
a result, many companies, when not forced by outside pressures, have 
themselves sought a plan which, though not as accurate, is simpler, 
quicker, and more readily understood by their employees. The choice is 
usually some measure of length of service, which is discussed more fully 
later in this chapter. 

Another limitation comes from the objection of some unions to the 
use of plans other than seniority in determining priorities of transfers 
and promotions and, for that matter, demotions and layoffs. Anticipat- 
ing later discussion, the position taken by some unions in favor of sen- 
iority is readily understandable. For one thing, one can scarcely argue 
about such a definite matter as the date on which an employee started 
to work with the company. On the other hand, merit ratings and inter- 
pretations of the relative abilities of employees to advance are subject 
to some debate, even when the best of systems is employed. So the 
unions cannot be blamed for refusing to embroil itself in such argu- 
ments. For another thing, though less justifiable, there are the tradi- 
tional arguments, which some unions still uphold, that all employees 
in a given occupation or unit of work are to be treated alike. If individ- 
ual differences were recognized, this would lead to arguments within 
the union itself. This internal debate would weaken the solidarity of the 
union's bargaining power with the company. Hence it is more sensible 
for the union to forego theoretical accuracy in order to enhance member- 
ship solidarity. 



220 PERSONNEL MANAGEMENT 



SENIORITY 



Inasmuch as length of service is a governing factor in matters of 
transfers and promotions in many companies, its discussion here is ap- 
propriate. However, k is also of significance in collective bargaining, 
relations with returned veterans, and such matters as vacations and 
wages, in which connection it will be mentioned later. Hence it is perti- 
nent to examine its meaning, methods, and policies of application and 
usage, as well as its advantages and disadvantages. 

Seniority may be defined as the practice of basing employment priv- 
ileges upon length of service. This simple definition belies many points 
that must be clarified if the seniority principle is to be employed with a 
minimum of trouble. First, it is important to indicate the conditions 
under which seniority is accumulated. Provisions must be incorporated 
covering the effect of absences, layoffs, leaves of absence, and other 
temporary breaks in service. Second, it is necessary to define the extent 
to which seniority will govern employment privileges. Rarely is seni- 
ority given complete control in such matters. Hence its weight as com- 
pared with merit and ability to perform work should be specified. Third, 
the employment privileges affected by seniority should be specifically 
defined. As noted in the foregoing paragraph, there may be several of 
these. And, fourth, it is highly significant to define the area of a com- 
pany within which seniority of a given employee is effective. Thus for 
some factors it may be company-wide, and for others it may be restricted 
to departmental borders. These matters will be expanded in the follow- 
ing pages. 

1. Application and Usage. The method of calculating length 
of service is an important part of a seniority plan. It should provide for 
the following factors: first, when seniority starts to accumulate; second, 
effect of various interruptions to employment; and, third, the effect of 
transfers and promotions upon seniority calculation. 

a) Accumulating Seniority. When there are no outside factors in- 
volved, seniority begins to accumulate as soon as an employee is hired. 
This should be specifically stated, particularly when a company under- 
takes collective bargaining. Otherwise, there is a possibility that the 
seniority of employees hired before a contract goes into effect may be 
dated from the date of the contract. Also in the case of union contracts, 
it is important to note whether or not new employees have seniority 
rights during their period of probation and whether or not the pro- 
bationary period will be included in the calculation of seniority. Again, 
where large numbers of employees are hired on the same date, a ques- 
tion of seniority may arise unless a basis for priority is established. In 



TRANSFERS AND PROMOTIONS 221 

such instances, priority may be established upon such an arbitrary basis 
as order of clock numbers assigned or upon an agreement between 
union and management officials. 

b) Interruptions to Service. After seniority begins to accumulate, 
there are a number of interruptions to service for which provision 
should be made. Ordinarily, interruptions that are due to the company's 
actions or are relatively short are customarily not deducted in calculating 
seniority. For example, time off for short personal absences, layoffs, and 
sick leaves are included in seniority accumulations. However, extended 
leaves of absence, layoffs beyond designated periods of time, and ex- 
tended sick leaves are often deducted in computing seniority. These 
aspects of calculating seniority will not cause difficulty so long as they 
are recognized and provided for. 

c) Job Changes and Seniority. More difficult to handle is the effect 
of transfers and promotions upon seniority calculations. Unless these 
matters are taken into account, some serious problems will be encoun- 
tered. For example, workers may be unwilling to accept or may even 
refuse transfers if the change means a loss of seniority. Or workers who 
have been promoted to a supervisory position and later demoted have 
sometimes found themselves at the bottom of a seniority list. Except in 
a few industries, such as the building trades, where the seniority of fore- 
men is protected, the seniority status of supervisors and transferees is 
not protected traditionally unless specifically stated by company policy 
or union agreement. Hence it is desirable, when questions of this type 
are likely to arise, to specify what the seniority privileges will be. Per- 
haps the fairest provision is to allow demoted supervisors the seniority 
they had before the promotion took place. In the case of transferees, 
it would seem fair to allow them to retain their seniority if they return 
to their old jobs and to have some measure of adjusted seniority if they 
remain on their new jobs. Otherwise, only the most adventuresome will 
be willing to transfer. 

Exemptions from seniority rules may also be desirable for technical 
and professional employees and for trainees. In order to avoid dis- 
criminatory practices in connection with such groups, unions sometimes 
require that the number of exempted employees must be limited to some 
percentage of nonexempted groups. In any event, to prove its fairness 
to all employees, it is well for management to define specifically exempt 
jobs and positions and restrict the conditions under which the exemp- 
tions shall apply. 

2. Merit versus Seniority. A second important part of any 
seniority plan is the matter of balancing seniority in relation to merit. 
This will occasion much debate unless carefully denned. It might seem 



222 PERSONNEL MANAGEMENT 

that a statement such as the following would be clear and fair: "As be- 
tween two employees with equal ability, the one with the greater sen- 
iority will be given preference." Unfortunately, in the event of disagree- 
ment, the employer or executive involved may permit his opinion of 
ability to outweigh seniority, whereas the employee or his union rep- 
resentative may stress the seniority far above ability. Although the ele- 
ment of personal opinion will always be of significance, it is neverthe- 
less important to specify whether ability and seniority will have equal 
weight or whether one or the other will be given greater weight. Usu- 
ally, in smaller companies, the merit factor will weigh more heavily; 
but, in the larger companies, particularly where unions have a strong 
voice, seniority is given greater weight. 

The extent to which a company can logically work out a plan balanc- 
ing merit and seniority will depend upon a number of factors. First, a 
set of job and man specifications should be carefully prepared so that 
claimants for jobs can be shown that requirements are objective and not 
capricious. Second, a complete and thoroughly understood transfer and 
promotion plan should be promulgated. Third, a good system of em- 
ployee merit rating should be installed. This system is best developed 
with the approval of the union, and ratings under it should be subject 
to some set plan of review. Fourth, performance standards should be 
set as objectively as possible so that measurements of employee produc- 
tivity and co-operation may be more readily acceptable by all. And, 
lastly, a well-thought-out grievance procedure should be established 
which is acceptable to employees and to the union if employees are so 
represented. These requirements are not easily met; until they are, there 
is little use in arguing for merit in place of seniority. Merit must be 
measurable, or its proponents have built their house of arguments upon 
sand. 

EMPLOYMENT PRIVILEGES AFFECTED 

The relative weight that seniority will have upon various classes of 
employment privileges also should be carefully defined. For example, 
it may be completely controlling in such matters as length of vacations 
and choice of vacation periods; or it may be controlling in choice of 
work periods, shifts, or runs in the case of transportation services. On 
the other hand, it may be only partly controlling in such matters as 
transfers and promotions. Similarly, in the matter of discharges and 
layoffs, seniority may be given part or total weight. In any event, the 
effect upon these employment aspects should be considered individually 
if disagreements are to be minimized. 



TRANSFERS AND PROMOTIONS 223 

Moreover, how seniority shall apply in each class must also be de- 
termined. For example, limitations must be placed on senior employees 
who replace or "bump" junior employees. Senior employees may be 
required within a given period of time to demonstrate that they can 
competently perform the jobs of employees they bump, or junior em- 
ployees may be protected if they hold special types of jobs or if they 
have been with the company after a specified number of years. 

On "recall" of employees after a production layoff, seniority rules 
vary. In some companies no "new" employees may be hired until all 
"available" laid-off employees are recalled. In other cases the company 
may have some discretion in hiring new employees as compared to lay- 
offs. In addition, the sequence of recalling seniority employees should 
be carefully indicated in terms of area of work to which their seniority 
applies and in terms of its importance relative to merit. 

On all other aspects of employment privileges, the foregoing exam- 
ples will suggest the need for specifying the influence of seniority. 

AREA OF APPLICATION 

Finally, the application of the seniority principle should give con- 
sideration to the area to which it applies. For example, it is unwise to 
give seniority company-wide application in such matters as transfers. 
The result, otherwise, will be that workers unqualified for vacancies 
will nevertheless apply for them if they have company-wide seniority. 
Hence it is important to select carefully the area over which, or the 
occupations within which, seniority of given classes of employees will 
apply. 

The usual areas of application are the department, the occupation 
(the "family" classification) , or company- wide. No one of these of itself 
is without disadvantages. As noted above, the company-wide plan un- 
duly favors the senior employee who wants to bump more qualified em- 
ployees in departments outside the immediate experience of the senior 
employee. In the case of departmental plans, very capable and key em- 
ployees may be lost because they cannot replace less qualified employees 
with less service in other departments. And the occupational plan may 
be affected by the disadvantages of the departmental or company-wide 
plan, depending upon how narrow or wide the "job family" in a given 
occupation happens to be. 

To minimize disadvantages arising out of seniority areas, it may be 
desirable to establish restrictive rules. For example, company-wide sen- 
iority may be applied to all unskilled and semiskilled jobs; departmental 
seniority may be applied to skilled jobs; and occupational seniority may 



224 PERSONNEL MANAGEMENT 

be applied to certain highly specialized classifications. Another restric- 
tive rule, of course, is that of applying merit qualifications to such sen- 
iority areas. 

SUMMARY 

In summary, the seniority plan of determining employment changes 
has the advantage of apparent simplicity in its favor. However, as may 
be deduced from the foregoing discussion, extreme care must be exer- 
cised in writing the seniority clauses; otherwise troubles will arise that 
may be more bothersome than those that had been hoped to be avoided. 
The major disadvantage of the seniority plan is that merit and ability 
tend to receive a minor place in reaching employment decisions. As a 
consequence, this places another hindrance in developing better work- 
manship. This is particularly true of the younger worker, who finds it 
useless to exert himself because only time will push him up the ladder 
of privilege and position. Unless more definite and acceptable methods 
of calculating ability and merit are applied, however, seniority may be 
expected to retain, if not to gain, a higher place as a tool for measuring 
employment preferences. 

QUESTIONS AND PROBLEMS 

1. How do you think an organization chart showing the age range of execu- 
tives would be received by the executives? If they objected, what would 
your course of action be if you thought such a chart was desirable to point 
out future personnel needs at the upper levels? 

2. What plan can you suggest to keep "job postings" from becoming out of 
date? From being overlooked? From being posted too long? 

3. If any company in your community is using "job posting," ask one of their 
executives how the plan is working out. If a union is involved, try to get 
their opinions, too. How do the two sets of opinions agree? 

4. When an employee is transferred or promoted to a new job, how long would 
you give him to prove himself? Check your estimates with industry practices 
in your community. 

5. What must be done to distinguish between actual skills that employees 
possess and their propensity to overvalue their abilities? 

6. What are the relative merits of formal as compared with informal plans of 
transfer and promotion? 

7. What values are contributed by a promotional chart to a plan of transfers 
and promotions? 

8. Why is a good plan of employee evaluation so important in operating a 
transfer and promotion plan? Are employees likely to be more trustful of 
executives when a rating plan is in use? 



TRANSFERS AND PROMOTIONS 225 

9. Why is it desirable to adopt a program of counseling and vocational guid- 
ance in connection with a rating plan? 

10. An employee is dissatisfied because he has not received a transfer that he 
considers should have been made. How would you go about convincing him 
that the right decision had been made? 

11. Under what conditions would you advise against transfers and promotions 
as means for filling job vacancies? 

12. Assume that a given supervisor is opposed to recommending transfers or 
promotions of his employees because he contends that he would thereby 
be faced with the task of replacing skilled workers with unskilled workers. 
What arguments would you give in rebuttal? 

13. Who should initiate transfers and promotions? Why? 

14. What tests would you use to determine the effectiveness of a program of 
transfers and promotions? 

15. Why is there a tendency for unions to favor seniority over merit rating as 
a basis for determining who shall be given transfers or promotions? 

16. Develop a plan for calculating length of service. To what factors must con- 
sideration be given in making such calculations? 

17. Assume that an employee is promoted to a supervisory position. What rec- 
ommendations would you make regarding the computation of seniority so 
that the individual in question would be protected if he later must be de- 
moted? 

18. Indicate the extent to which seniority should be weighted as compared to 
merit in relation to such matters as transfers, promotions, demotions, choice 
of vacation periods, and choice of working shifts. 

19. Discuss the merits of seniority plans that are job-wide or apply to the "family 
of occupation" as opposed to those that are company-wide. What problems 
arise in each case? 

20. What would be the merits, if any, of using merit rating for upward advance- 
ments and seniority for demotions, layoffs, and discharges? 



CHAPTER 



12 



Merit Rating 



RATING PROGRAMS 

As noted in the preceding chapter, employment privileges are often 
dependent upon the merit of employees. It is appropriate, therefore, to 
examine plans of measuring merit. It should be noted that merit rating 
has other uses too, e.g., in counseling, training, compensation, and 
handling grievances and disciplinary matters. 

Rating of employees is one of the oldest and most universal practices 
of management. There never was a time when executives and super- 
visors did not estimate the relative worth of employees, one to another. 
But it is only within recent years that rating has progressed from a 
highly personalized, indefinite, and esoteric status to a level of uniform, 
consistent, and studied practices. Such formalized plans, nonetheless, 
cannot be adopted without careful planning. Some managements have 
given up — or have been forced to give up — merit rating plans, in favor 
of the alternative, seniority programs, because merit rating fell into dis- 
repute with the employees. Some defect in the plans, or in their use, led 
to their being discarded. The moral is that formal merit rating plans will 
not, in and of themselves, operate effectively. Hence, while it may be 
argued that formalized programs are superior to indefinite, personalized 
ratings, this argument assumes that the former are carefully designed 
and controlled. 

In approaching this question of rating, a decision must be reached as 
to who is to be rated. Most companies at the outset rate only operative 
employees and exclude executive, professional, and technical groups. 
The need is greater among the former, while rating of the latter is also 
much more difficult. However, a good rating program should eventually 
encompass all employees of a company. The discussion in this chapter 
will give consideration to suggestions which are useful for all levels and 
categories of employees, but it will be devoted primarily to practices 
concerned with operative employees. 

226 



MERIT RATING 227 

Rating programs are called by a variety of names. Most popular has 
been that of "merit rating." Some object to this term on the grounds 
that it smacks too much of school grading or that there is no connota- 
tion of progressiveness or constructiveness. Hence, such terms as "serv- 
ice rating," "progress rating," or "development rating" are preferred. 
Important as a good title may be for this program, much more signifi- 
cant, of course, are the uses to which such ratings are put and how they 
are made. 

In this description of rating practices, the subject will be discussed 
under the following headings: 

1. Objectives 

2. Fundamental issues of rating 

3. Design of rating forms 

4. Rules of rating 

5. Accuracy of ratings 

OBJECTIVES OF RATING 

Any of a number of objectives may be sought by means of rating 
programs. First and foremost is the simple objective of determining 
more accurately which employees should receive pay increases, which 
should be given transfers or promotions, and which should be given 
preferred status. Obviously, vacancies, for example, can be and are being 
filled in many companies without planned rating programs. The result 
invariably is unnecessary grievances, whether or not they are recognized 
by the company. Second, when disputes arise over such matters, the 
availability of a series of ratings (particularly if they have been dis- 
cussed with the employees concerned) provides management with in- 
formation that will help to satisfy the aggrieved persons. Third, from 
the viewpoint of management, supervisors and executives who know 
that they will be expected periodically to fill out rating forms ( and be 
prepared to justify their estimates) will tend to be more observant of 
their subordinates and hence tend to become better day-to-day super- 
visors. Such improvements in supervision, in the fourth place, are more 
significant as companies attain a size which makes it impossible for the 
"head man" to know all the employees. Unless supervisors follow uni- 
form rules of rating, the treatment received by all employees and the 
opportunities opened to them will not be consistent throughout the or- 
ganization. And, lastly, a rating program recognizes the existence of 
individual differences and serves both the employees and the company 
by helping to place each employee in the job he is best suited for. 



228 PERSONNEL MANAGEMENT 

The practical application of these objectives may be seen in the list 
of purposes compiled by the National Industrial Conference Board in 
a survey of ninety-four companies: 

1. To help in deciding who should be promoted, demoted, or given a raise 
in pay 

2. To discover workers' weaknesses as a basis for planning training 

3. To uncover exceptional talents 

4. To furnish a basis for discharge of totally unfit employees 

5. To help top supervisors learn how each person is appraised by his fore- 
man 

6. To help top supervisors judge the fairness, severity, or leniency with 
which supervisors judge their people 

7. To help in assigning work in accordance with workers' ability 

8. To serve as a check on employment procedures generally and interviews 
and tests specifically 

9. To stimulate people to improve 

10. To develop people's morale through stimulating confidence in manage- 
ment's fairness 1 

A rating plan need not encompass all these objectives. Indeed, by 
union agreement, it may be decided that merit shall have little or noth- 
ing to do with choosing candidates for transfer or promotion, let us say. 
Yet merit rating could serve as a basis for counseling employees about 
their strengths and weaknesses or in improving supervisory-employee 
relations. Thus employment of merit rating is justifiable, even though 
union agreements preclude its use for some purposes. 

This discussion of objectives would be incomplete without the ad- 
monition that merit rating must not be used for purposes beyond its 
capacities. To be specific, some plans have been wrecked by using merit 
rating to grant general wage increases that really stemmed from labor 
market conditions and not relative individual merit. For example, a 
supervisor may know that a key employee is thinking of quitting to get 
more money elsewhere. The supervisor does not want to lose the em- 
ployee. So he rates him much higher than he deserves in order to get 
him a wage increase. The "news" gets around, and soon others demand 
the same treatment. And the merit rating plan becomes a "used" rather 
than a useful tool. If general increases are called for, that is a matter 
of wage and salary policies. Misusing the merit rating plan for this pur- 
pose makes everyone a participant in a "crooked" game which leads to 
distrust of management and of other personnel policies. 



1 Reign Bittner, "Developing an Employee Merit Rating Procedure," Personnel, Vol. 
XXV, No. 4 (January, 1949) , p. 277. 



MERIT RATING 



229 



FUNDAMENTAL ISSUES OF RATING 

Perhaps the best place to begin a description of merit rating is with 
the fundamental issues raised by rating. These include, first, the basic 
theory of rating; second, the bases of comparison involved in rating; 
and, third, the basic question of whether or not ratings should be dis- 
cussed with employees. 

1. Basic Theory of Rating. As already indicated, rating is the 
act of estimating the relative worth of employees in order to determine 
the rewards, privileges, or advantages that should be given or with- 
held from each. One measure of relative worth is the contribution made 
by each employee. In simple form, this may be diagrammed as follows: 



EMPLOYEE 
CONTRIBUTIONS 



LEAD TO 



AND ARE MEASURES OF' 



REWARDS OR 
PENALTIES 



However, it is not always possible to measure employee contribu- 
tions. Or, when it can be done, it nevertheless may be desirable to 
advise employees how their contributions may be increased. In such 
instances, it is necessary to ask: What is there about the individual that 
caused the contribution? For example, individual characteristics, in- 
stead of contributions, may be used as the basis of rewards and penalties, 
as shown in the following diagram : 



EMPLOYEE 
CHARACTERISTICS 



CAUSE OF 



EMPLOYEE 
CONTRIBUTIONS 



WHICH LEAD TO 



REWARDS AND 
PENALTIES 



•AND ARE USED AS MEASURES OF i 



Let us assume that Employees A and B receive 90 cents an hour on a 
given job and are being considered for raises. Their respective contribu- 
tions to service objectives should be weighed because the contributions 
that anyone makes to the ultimate customers of a company are the justi- 
fication for compensation. But if, in the first place, it is impossible to 
measure such contributions because an individual's work is intermixed 
with those of others, ratings may be made of the characteristics that 
caused the contributions. Or, second, if it is desired to tell each employee 
why his contributions are as they are, then a rating should be made of 
employee characteristics as the basis for such suggestions. Thus ratings 
may be made of employee contributions, such as quantity and quality 
of work, supervision required, responsibilities assumed, and influence 
upon the work of fellow employees. Or ratings may be made of em- 
ployee characteristics, such as appearance, initiative, dependability, per- 
severance, and loyalty. 



230 PERSONNEL MANAGEMENT 

This distinction of what is measured is important. If it is not recog- 
nized, the mistake will be made, as many companies have, of including 
both characteristics and contributions on the same rating scale. On the 
other hand, if recognized, such duplication may be used to good pur- 
pose. The performance of employees may be compared with their per- 
sonal qualities to determine whether or not performance is up to 
personal possibilities as indicated by the rating. 

2. Basis of Comparison. Another fundamental issue of rating 
concerns the bases of comparing personal characteristics or contribu- 
tions. When it is said, for example, that Employee A is better than Em- 
ployee B, is the comparison based upon — 

1. The two employees relative to each other, 

2. A and B as compared to other workers, 

3. A and B as compared to an ideal worker, or 

4. Arbitrary yardsticks of various factors? 

Perhaps there is no more common method than that of comparing 
two or more people in a given situation. To be sure, this practice suf- 
fers from the lack of a common and unvarying standard, but it is simple. 
Hence some of the earliest attempts to rate employees were based upon 
a simple ranking of employees. The names of all employees were placed 
on cards, and the cards were sorted in order, from highest to lowest. 
While this method does not indicate the relative differences in em- 
ployees and the rating depends upon who is on the payroll at a given 
time, it nevertheless is a step forward. At least the rater has put himself 
on record and is, therefore, likely to be more careful in his estimates. 

However, this plan may be easily improved. Accuracy of ratings 
may be advanced by comparing all employees with selected employees 
who are considered to be representative of the best, above average, 
average, below average, and the poorest. In this way, an employee who 
rated "above average/' for example, could be given a better impression 
of his relative worth than when he is told that he was twelfth, let us 
say, in a list of forty employees. This form of man-to-man rating may 
be improved in two ways. First, this may be done by using several fac- 
tors of rating man to man. For example, an employee may be compared 
to a five-man standard in terms of such factors as initiative, co-opera- 
tion, and dependability. These factor ratings are then arranged to estab- 
lish an over-all grade. Second, instead of using actual employees as 
standards for best, above average, and so forth, ideal descriptions may 
be developed. This avoids changes in standards that occur when em- 
ployees who have been used as models leave the department or com- 
pany. 



MERIT RATING 231 

While some companies use refined systems of man-to-man rating 
plans, the trend has been toward plans in which measuring sticks of 
factors common to all employees are used. The measuring sticks may 
be descriptive or quantitative. Descriptive measuring sticks are those 
in which words are used to describe varying degrees of personal factors 
or contributions of employees. For example, Figure 45 (pp. 232-33), 
illustrates a form in which raters evaluate workers by checking appro- 
priate items among the choices available. Quantitative measuring sticks 
may be arithmetical or graphical. In the arithmetical plan (Fig. 45), 
various factors to be rated are listed. Opposite each, the rater is required 
to write in a number or letter grade indicating the degree to which the 
employee being rated possesses it. In the graphical plan (Fig. 46, 
p. 234), lines, divided into various lengths to indicate degrees of con- 
tribution or personal characteristics, are used to aid the rater in making 
his decisions. The graphical method has gained in favor over other 
methods because qualitative differences are easier to visualize. 

3. Consultations with Employees. Another important ques- 
tion is whether or not results of ratings should be discussed with em- 
ployees. The decision not to do so may be reached for two reasons. First, 
some companies feel that rating discussions lead to needless contro- 
versy and recrimination. And, second, in connection with the forced- 
choice plan of rating, to be described later, it is necessary that the 
method of scoring the rater's evaluation be kept secret. On the other 
hand, most companies discuss ratings with employees as a regular prac- 
tice or upon the request of employees. This policy is based upon the 
principle that interchange of information between employer and em- 
ployee is the best way of uncovering and removing sources of irritation. 

Although there may be occasions when ratings should be withheld 
from employees, it seems better to work toward a relationship of frank 
discussion between employer and employee. If grievances exist or if 
employees have shortcomings, they cannot be reduced or removed 
simply by waiting. Sooner or later the matters must be discussed. The 
question is one of timing: When is it most appropriate to open discus- 
sions? Of course, after a rating program has been installed, the first 
ratings will raise what appears to be a hornet's nest of controversy. 
Once these are cleared up, subsequent ratings will result in fewer 
controversies. 

The periodicity of rating which most companies follow is indicative 
of the fact that ratings tend to reduce rather than increase disagreements. 
It is rather common to rate new employees more frequently than old. 
Thus in one company, new employees are rated after one month, three 






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MERIT RATING 235 

months, six months, and a year. Thereafter they are rated annually. This 
practice recognizes that newer employees are more likely to be sources 
of trouble than older employees who have had advice on their progress 
or lack of progress. Some companies that have started rating plans, 
placed them on a quarterly basis. It was decided later that semiannual or 
annual ratings would suffice. This, too, recognizes that after years of 
unplanned attack upon sources of trouble, many grievances and prob- 
lems will have piled up that, for a time, will require extra attention. 

DESIGNS OF RATING FORMS 

The term "theory" has been used several times in connection with 
rating, for the reason that there is no one way of rating that has been 
proved completely superior to all others. In the following discussion 
of rating designs, more attention will be paid to the graphical method 
because up to the present it has been the most widely used. However, 
the forced-choice method seems to possess very strong advantages; and, 
although limited in use at present, it seems to have a good future. 

1. Design of Graphical Forms. The use of rating forms can 
lead to excellent results, provided that practical rules of design are 
adopted. In the following are listed and described some of the more 
significant rules: 

1. Perhaps the most important step, at least initially, in the design 
of rating forms is to determine precisely the objectives of the program. 
As noted earlier, there are two major uses of ratings: first, as the basis 
for rewards and penalties and, second, as the basis for explaining to 
employees why they are making or not making progress. If the first 
of these objectives is sought, the rating form should include factors that 
measure as closely as possible employee contributions. Figure 46 is an 
example of such selections, in that, except for the last item, all factors 
relate to production or efficiency in production. Figure 45 (pp. 232- 
33) illustrates a rating form in which personal characteristics pre- 
dominate. If it is desired to attempt to accomplish both purposes, factors 
of each type must be included in the form. 

2. Having determined the type of factors to be rated, the next step 
is to determine which factors, and how many, should be selected. This 
problem is not too difficult when ratings are made of productivity. For 
example, the factors in Figure 46 are very inclusive, covering all aspects 
of a given individual's work; yet the number of factors to be rated is 
not unduly large. 

Rating forms that delve into personal characteristics present a more 
difficult problem. To begin with, even a brief review of the following 



236 PERSONNEL MANAGEMENT 

list of personal characteristics reveals differences in specificness and 
problems of overlapping: 

Personality Honesty Persistence 

Character Initiative Imagination 

Dependability Industriousness Enthusiasm 

Attitude Leadership Aggressiveness 

Adaptability Judgment Loyalty 

Appearance Co-operativeness Creativeness 

Manner Impression on others 

In selecting the factors to be rated, it has been found that not more 
than nine to twelve traits should be used. Some investigations have 
shown that as few as three or four traits are sufficient to give good re- 
sults. However, until various groups of executives are taught to give 
up their belief that there is a safety in numbers, it is easier to get their 
co-operation when a higher than a lower number of traits is used. 

As to the traits to be selected, a better choice can be made if the fol- 
lowing rules are watched: 

a) Select traits that are specific rather than general; e.g., honesty is more 
definite than character. 

b ) Select traits that can be denned in terms understandable in the same way 
by all raters. 

c) Select traits that are common to as many people as possible. 

d) Select traits that raters can observe or be taught to observe in the day-to- 
day performance of employees. 

3. Since all factors usually do not have equal weight in all jobs, it is 
also necessary to determine how much importance should be accorded 
to each one. This can be accomplished by conference with interested 
line executives. Some companies provide space for the weights on the 
form itself, whereas others contend that it is better to omit the weights 
in order to avoid confusing the raters. In the latter case, the weighting 
is done by the personnel department. 

4. In the physical design of rating forms, an important question is 
that of how to arrange the factors and the spaces for rating. This in- 
volves, first, order of arranging factors and, second, the particulars of 
rating. There is no general rule that is followed in arranging factors; 
some arrange them from specific to general, and others reverse this; 
some like to list factors easy to rate and then go on to the more diffi- 
cult; and still others adopt a considered disorder. 

In the matter of particulars of rating, there is a diversity of practice, 
much of which is mere whim. When the graphical plan of rating is to 
be used, adoption of the following suggestions may be desirable : 



MERIT RATING 237 

a) Do not number all scales in the same direction from high to low or low 
to high. To do this, encourages the tendency of raters to evaluate all fac- 
tors as they do the first, irrespective of warranted differences. 

b) Use of scales of varying length, as shown in the following design, also 
serves to reduce the influence of the rating of earlier or subsequent fac- 
tors: 

FACTOR AJ I I I I I 

_j _ | _ | _ | _ | - | 

FACT0R "H 1 1 ^H c 1 B I A I 

FACTOR CI I I I I I 



c) Use descriptions to indicate varying degrees of each trait instead of 
grades and numbers, and omit division points along the scales. As a con- 
sequence, the tendency of raters to fit each employee to the scale rather 
than to concentrate on the employee will be avoided. For example, some 
raters tend to check the following scale in the center or edge of each 
grade, depending upon their personal bias: 

A B C D E 

FACTOR A | || | ] | ] 1 | | | 1 | 1 | 1 | | | 1 | | | || 1 1 [ UNI | | 

The following type of scale tends, however, to take the mind of the rater 
off of the scale and make him concentrate on the employee: 

FACTOR A | H|GH OUTpuT AVERAGE BELOW AVERAGE POOR ' 

5. The description of factors and degrees of factors, already men- 
tioned, deserves special attention. Some of the hypothetical illustrations 
used in the foregoing would, if adopted, be weak because descriptions 
are not given. To use such terms as "excellent," "above average," "aver- 
age," and so forth, to describe varying degrees of factors is undesirable 
because each rater must make up his own mind as to their meaning. 
As a result, varying standards are used to rate employees. Much to be 
preferred is the practice illustrated in Figure 47 (pp. 238-39) of pro- 
viding raters with detailed descriptions. 

6. It is also good practice to provide space under each factor wherein 
raters can enter comments or significant incidents. This adds a check 
on the rating and makes the rater more careful in appraising employees. 
Indeed, some students of rating believe that the comments are the most 
valuable aspect of rating forms. A form in which comments are stressed 
is illustrated in Figure 48 (pp. 240-41). 



238 PERSONNEL MANAGEMENT 

FIGURE 47. Rating Form for Use of Oral Examiners 4 



PLACE- 



DATE. 



BOARD NUMBER. 



1. APPEARANCE. What sort of first impression does he make? Does he look 
like a well-set-up, healthy, energetic person? Has he bodily or facial characteristics 
which might seriously hamper him? Is he well-groomed or slovenly? Erect or 
slouchy? Attractive or unattractive in appearance? 

2. VOICE AND SPEECH. Is the applicant's voice irritating, or pleasant? Can 
you easily hear what he says? Does he mumble, or talk with an accent which of- 
fends or baffles the listener? Or is his speech clear and distinct, so that it would 
be a valuable asset in this position? 

3. POISE AND BEARING. How well poised is he emotionally? Is he sensitive 
to criticism? How does he react to close questioning? Is he easily upset or does 
he control himself? Does he show shyness or is he self-confident? Does he adapt 
himself to the situation without very much effort? 

4. TACT AND FRIENDLINESS. Is he a likeable person? Will his fellow workers 
and subordinates be drawn to him, or kept at a distance? Does he command 
personal loyalty and devotion? Is he cooperative? How will he get along with 
others? Will he command the respect of his associates? 

5. ALERTNESS. How readily does he grasp the meaning of a question? Is he 
slow to apprehend even the more obvious points, or does he understand quickly 
even though the idea is new, involved or difficult? 



6, ABILITY TO PRESENT IDEAS. Does he speak logically and convincingly? 
Or does he tend to be vague, confused or illogical? Does he have good command 
of language? Does he express himself clearly and to the point? 



JUDGMENT. Does he impress you as a person whose judgment would be de- 
pendable even under stress? Or is he hasty, erratic, biased, swayed by his feelings? 
Is he self-critical? Does he weigh situations or act impulsively? 



8. PERSONAL FITNESS FOR THE POSITION. In the light of all the evidence 
regarding this person's characteristics (whether mentioned above or not) how do 
you rate his personal suitability for work such as he is considering? Recalling that 
it is not in his best interest to recommend him for such a position if he is better 
suited for something else, would you urge him to undertake this work? Do you 
endorse his application? 



Fuller instructions and space for comments on applicant's behavior will 
be found on the back of this sheet. 

* Source: The State Civil Service Commission of Ohio. 

7. And, finally, consideration should be given to general rules of 
form design. That is, size of type, color and weight of paper, size of 
form, and so forth, should be chosen to conform with such matters as 
who is to use the form, how long the forms are to be kept, where and 



MERIT RATING 

FIGURE 47. -Continued 



239 



IDENTIFICATION NUMBER- 
POSITION APPLIED FOR_ 



EXAMINATION NUMBER. 



Unsuitable 
Unimpressive 



Creates rather 
unfavorable 
impression 



Suitable 
Acceptable 



Creates distinctly 
favorable impression 



Impressive. 
Commands 
admiration 



Irritating or 
indistinct 



Understandable 
but rather 
unpleasant 



Neither 

conspicuously 

pleasant nor 

unpleasant 



Definitely pleasant 
and distinct 



Exceptionally clear 
and pleasing 



Lacking in balance 
and restraint. Very 
timid and awkward 



Self-conscious, 
easily disconcerted 



Fairly at ease, no 
tension, good poise 



Self-assured, calm. 

Very good self 

control 



Exceptional poise. 

Dominates situation. 

Adjusts easily 



Keeps people at a Does not easily Approachable, 

distance. Too aggress- attract people. likeable, 

ive. ill-mannered Manner somewhat polite 

abrupt 



Draws people to him. 

Considerate of 

others 



An inspirer of 

loyalty. 

Outstanding qualities 

of leadership 



Slow in grasping Slow to understand Nearly always 
the obvious. Often subtle points. grasps intent 

misunderstands Requires explanation of interviewer's 
meaning of questions questions 



Rather quick in 

grasping questions 

and new ideas 



Exceptionally 

keen and quick 

to understand 



Confused, 

illogical. 

Ungrammatical 



Tends to scatter or 
to become involved. 
Has to be drawn out 



Usually gets his 
ideas across well 



Shows superior 

ability to express 

himself 



Unusually logical 
clear and convincing.. 
Excellent vocabulary 



Uncritical. Does not 
evaluate situations 



Shows some 
tendency to react 
impulsively and 
without restraint 



Acts judiciously In 

ordinary 

circumstances. 

Might be hasty 

in emergencies 



Gives reassuring 

evidences of habit 

of considered 

judgment 



Inspires unusual 

confidence In 

probable soundness 

of judgment 



Unsuited for this 
work. Not endorsed 



Might do. Endorsed 
with hesitance 



Endorsed with 
confidence • 



Endorsed with 
enthusiasm 



SIGNATURE OF RATER 



how forms are to be filed, and whether or not information is to be trans- 
ferred to other records. Unless these matters are also kept in mind, 
rating forms will be designed, as many have, that are difficult to handle 
at various stages of the rating procedure. 

8. These recommendations, it is important to note, need not be fol- 



240 PERSONNEL MANAGEMENT 

FIGURE 48* 
EMPLOYEE PROGRESS REPORT 



John Richards 



AG 



NAME 

JOB CLASSIFICATION. 

DATE EMPLOYEO September U, 193& HOW LONG > f 1 HIM? 



Draft sman 



e_29_._ DATF Au gxet 20, I9U5 . 
oept En gineering 



HOW LONG HAS HE WORKED FOR VOU? 



PRESENT CLASSIFICATION? 



IMPORTANT-BE SURE YOU consider only one characteristic at a time, regardless 
OF how good or poor he may be in the others, it is essential that every ques. 

TION BE ANSWERED. IF MORE SPACE IS NEEDED TO ANSWER ANY ITEM. PLEASE WRITE ON 
PLAIN PAPER AND ATTACH TO THIS FORM. 



CHANGE SINCE 
LAST REPORT. OR 
SINCE HE HAS 
FOR YOU. 

B.C. Dai) 



8; 



A. KNOWLEDGE OF PRESENT JOB check which-* 

(I) WHAT EXPERIENCE ON HIS PRESENT JOB DOES HE LACK OR WHAT TRAINING DOES HE NEED IN ORDER 
TO DO BETTER WORK? 



IS) WHAT INFORMATION ABOUT RELATED JOBS DOES HE NEED TO IMPROVE HIS EFFICIENCY?. 






B. QUALITY OF WORK -— chcck which- 

(II WHAT SHOULD HE DO IN ORDER TO IMPROVE THE QUALITY OF HIS WORK? 1 ^HA. ~^Mn^-i- 



&s<LA^^~iinAl^ 



BE DEPEND 



<a> TO WHAT EXTENT CAN HE BE DEPENDED UPON TO DO AN ASSIGNED JOB THOROUGHLY AND COM- 
PLETELY WITHOUT SUPERVISION OR CHECKING? AuL^VLAj~^f^l /7~>L^t4^ ~>t-»^>^>T^- 0JL 

2My\K^UTTv V ^ 



^MA<iA 



(SI NOW DOES THE QUALITY OF HIS WORK COMPARE WITH WHAT YOU EXPECT OF HIM?. 






C. QUANTITY OF WORK etc* which-* 
<t> HOW DOES THE QUANTITY OF HIS WORK COMPARE WITH WHAT YOU EXPECT OF HIM? 



, "HE 'HAVE INITIATIVE I SELF-STARTER) 



^y 



zdLa^K tt 



(<> DOEs"he'hAVE INITIATIVE I SELF-STARTER ) T ~^jtf^ - ~ oL^Lgti^hL Trf ~^^M/f 



<8> IS HE PERSISTENT (STICK-TO-ITIVENESSI ? 



^T 



:/yi\*\A*C/k- **la 



1 1 1- 



D. ABILITY TO PLAN AND UNDERSTAND WORK 



CHECK which—* 
B* 'PLAN 



HI IN ORDER TO WORK EFFECTIVELY AN EMPLOYEE SHOULD: (A) ANALYZE 

THE JOB ROUTINE SO THERE WILL BE A MINIMUM OF LOST MOTION. (Cl EXECUTE THE PLAN. (D) CHECK 

THE RESULTS AND IE) PROFIT BY MISTAKES. ON WHICH OF THESE STEPS DOES THIS EMPLOYEE NEED 



TO IMPROVE IN ORDER TO DO BETTER WORK?. 



fA) A^J (0) 



(SI DOES HE THINK OUT BETTER WAYS OF DOING THINGS (RECOGNIZE SHORT CUTS) 1 



ft. 



-7vrt 



(91 DOES HE THOROUGHLY UNDERSTAND INSTRUCTIONS QUICKLY? t A&rf " Z "TV? ■ jX^SOL^jA 



IF PERFORMANCE OF ANY OF ABOVE IS BELOW EXPECTATIONS. WHAT SHOULD BE DONE TO BRING 
ABOUT IMPROVEMENT? (PX&^J~bkjL, -^1 A rfr\4< . ^U "TKXVC "UnAL -&. *- 






"v-i^^r-v sfr-v^ ~tkjL, 



* Source: A. R. Laney, "Getting Results from Merit Rating," Personnel, November, 1945, pp. 173-74. 



lowed to the letter in every case. Indeed, it is often unwise to insist upon 
some of these rules, when such insistence would lead to objections from 
executives who must finally approve the program, but who are as yet 
not sufficiently educated to appreciate the finer details of design. In one 
case, for example, the personnel director had to violate rules of which 
he was aware because he knew that to insist upon his views might 
jeopardize the whole rating program. Wisely, he calculated how far he 



MERIT RATING 241 

FIGURE 4B.-Continued 



E. PERSONAL QUALITIES 



LNC HI 



1> IS HE RECEPTIVE TO SUGGESTIONS?- 



2) IS HE WILLING TO HELP OTHERS? C /]{}3 I 



3) HOW DOES HE GET ALONG WITH HIS FELLOW EMPLOYEES?- 



4) DOES HE LOSE MUCH TIME?- 



Ma^a ^ /f^r-D-g C 0Jtth~A- cLfi-^-Cu SULC^\J. 



1 



5) DOES HE "HAVE A GOOD SAFETY °^™r,, ~^l 7 /].L>4 -- -£-^-^ I^JU^tV ~4k^J A- tSxT^' 



*y 



6) IS H.E AS NEAT IN APPEARANCE AS HIS JOB REQUIRES?- 



7A^W , 



> "Tt^wcA^^^, 



7) IN WHAT PERSONAL QUALITIES COULD HE IMPROVE?- 



"7u— XX. • 



LIST ANY GOOD TRAITS OR WEAKNESSES NOT COVERED ELSEWHERE IN THIS REPORT: 






•^Urt^AcjLAj 



DO YOU THINK THAT HE IS BETTER QUALIFIED TO DO SOME OTHER TYPE OF WORK (SQUARE PEG IN A ROUND MOLE! » 



•^<^-^^.^l^J -<£tTV -fc-^* -suJxZsla^aJl : ^^^^^yx^r^Ax^ui: 



f..L.~^r-d?IsL^™x> DAT r 6U^asa <«*. ZZ„ 'Jd£ 



PREPARED BY. 
•REVIEWED BY ^^0 W Q^T^tX^ (TW~ DAT f(\ KS^LA , 7-^ '. ^±5 



«, 



THIS REPORT SHOULD BE REVIEWED WITH YOUR SUPERVISOR BEFORE DISCUSSING IT WITH THE EMPLOYEE. 



RECORD OF INTERVIEW 
THIS REPORT WAS DISCUSSED WITH THE EMPLOYEE OH 7/^ /"TO (DATE) DISCUSSION REVEALED THAT- 






yt^iA. 






•sbA>*r~yy~<^U-Ji ~k qsw/\s*^it, O^firY ^-&^rA, ~k --„— - __. 



(/ SUPERVISOR 



could go in designing a good system and yet get it approved. He did not 
confuse top executives with technical details, because he knew that, once 
the program began to show results, he could get the changes that were 
desirable. Knowing how fast to push the extension of various personnel 
programs is an absolute requirement if a personnel director expects to 
be successful, personally, as well as professionally. 

2. Design of the Forced-Choice Method. The forced-choice 
method of rating has been developed in an attempt to improve the ac- 



242 PERSONNEL MANAGEMENT 

curacy of ratings by reducing the biases, intentional or not, of raters. 
Under the graphical method, for example, a rater may "give" a par- 
ticular person high ratings because he wants the person to receive a 
raise. Under the forced-choice method, the rater, when making his 
choices cannot tell how the final rating is going to turn out. 

How this is done may be seen in the following excerpt from such a 
plan, as described by Bittner: 

A number of groups of four statements descriptive of supervisors were set up, 
like the following: 

1. Avoids responsibility 

2. Inspires pride in the organization 

3. Lacks sense of humor 

4. Offers suggestions 

The rater was then asked to choose from each group of four statements the one 
that was most descriptive of the person to be rated and the one that was least 
descriptive. 

Now two of the statements are favorable to the person and two of them un- 
favorable. The two favorable statements look equally attractive to the rater, and 
the two unfavorable look equally unattractive. At least they would if they had 
been paired on the basis of research. The important point is that only one of the 
favorable statements counts for the person and only one of the unfavorable ones 
counts against him. But the rater does not know which these are because the 
scoring key is not revealed to him. So he is forced to decide solely on the basis 
of how he describes the man. If he is biased, he cannot mark the one that will 
reflect his bias because he does not know which one that is. He does not have to 
wrestle with trait names or the problem of how many points to give because he 
is merely asked to choose which of four rather dissimilar statements best or 
least describes the person. 

The trick, of course, is to set up these groups of four statements, and much 
research must go over the dam before this is achieved. I shall not attempt to 
go into this in detail but shall merely sketch the steps involved. They are the 
following: 

1. Gather actual words and phrases used in describing supervisors. 

2. Cull them for observability and universality. 

3. Scale them for their degree of attractiveness or unattractiveness. 

4. Determine how well each discriminates between good and poor super- 
visors. 

5. Determine the score that each gets in adding up the total score. 

6. Verify the scoring system set up by check experiments. 2 

This method was developed by the army during World War II, but 
it has excellent possibilities for industry. An interesting example of the 
forced-choice technique in industry is reported by Eileen Ahern of the 
American Management Association. She notes that the United Parcel 
Service has used this technique in evaluating executives and supervisors. 

2 Ibid., p. 290. 



Most 


Least 


A 


A 


B 


B 


C 


C 


D 


D 


E 


E 


Most 


Least 


A 


A 


B 


B 


C 


C 


D 


D 


E 


E 



MERIT RATING 243 

Emphasis here in rating is upon performance reports, with a separate 
form being used for rating. An example of the type of choices provided 
follows: 



Would be very difficult to replace. 
Lets difficulties get him down. 
Alert to new opportunities for the company. 
Tries to run things his own way. 
Tends to delegate things which will not reflect 
credit on him. 

Not willing to make decisions unless he has 

very complete information. 
Makes snap judgments about people. 
Has not demonstrated up to now that he has 

the ability to progress further. 
Very valuable in a new operation. 
Good for routine supervisory job. 

As may be seen from the foregoing, however, this is not a simple 
plan to develop. However, its accuracy is high because the biases of 
raters and their misinterpretations of trait terms are reduced measurably. 
The rater can scarcely bias his answers, except through ignorance, be- 
cause he does not know the significance attached to each block of 
choices: some are neutral, some have zero weights, and others have posi- 
tive or negative weights. Since methods of scoring must be kept secret, 
however, k is not an easy plan to sell to employees or unions. 

RULES OF RATING 

Forms of rating are merely means that must be used properly if de- 
sired ends are to be attained. Hence instruction in the proper use of 
rating forms is also an essential of a good rating program. In this regard, 
a number of rules have been evolved which, if followed, will increase 
the value of ratings. 

First of all, it is important to determine who is to do the rating. In 
some companies, two raters, usually the immediate supervisor and his 
superior, rate each employee. The purposes of the double rating are to 
derive a check on ratings and to induce higher executives to keep in 
touch with lower levels of the organization. It is debatable, however, 
whether or not rating should be made in this way. The purposes are 
admirable, but it is unwise to ask an executive to make estimates about 
employees with whom he seldom comes into contact or when he cannot 
do so practically without neglecting his regular duties. Ordinarily, it is 
better practice to place the burden of rating on the person best able to 
assume it — the immediate supervisor. He not only can do the best job 



244 PERSONNEL MANAGEMENT 

but also will improve himself in his daily supervision by becoming more 
observant of his employees in order to be in a better position to rate 
them. 

Second, raters should be thoroughly instructed in the purposes and 
values of the program. Most supervisors are suspicious of new methods 
because they seem to reflect upon their own ambitions. A rating pro- 
gram, particularly, can easily giye this impression unless it is properly 
introduced. Hence it is desirable to hold conferences in which the 
reasons for the program, the part that supervisors are to play, and the 
advantages to all concerned are carefully explained. Such conferences 
also can increase the prestige of the supervisor and his own feeling of 
worth-whileness by showing him how important he is to the success of 
the program. 

Third, all factors, degrees of factors, and terms should be meticu- 
lously explained to raters. Both verbal and printed explanations are 
worth using. In most instances, explanations are printed on the rating 
form, but this usually is not enough. It is invariably essential to hold 
conferences in which explanations are amplified, opportunity is pro- 
vided for questions, and even demonstrations of filling in rating forms 
are given. In this way, there is greater assurance that all raters will 
interpret all terms in the same way and hence produce ratings that are 
based upon the same standards. 

Fourth, several suggestions can be made that will improve the ac- 
curacy of ratings. To begin with, raters should be impressed with the 
need for observing workers in terms of the factors in which they are 
to be rated. In this way, the task of rating will not be a chore or a 
matter of guesswork. Raters should also be advised to guard against 
allowing recent events or isolated cases to influence unduly their deci- 
sions. In this connection, the practice of recollecting examples of indi- 
vidual performance and traits is desirable. Then, too, raters should be 
advised to allow enough time and find a relatively quiet office for the 
rating job. Interruptions tend to reduce the accuracy of ratings. It has 
also been found advisable to rate all employees one factor at a time 
because the consistency of rating is thereby increased. And, finally, it 
should be suggested to raters that, by taking an attitude of helpfulness 
rather than vindictiveness, they will make the ratings more accurate 
and acceptable. 

CHECKING ACCURACY OF RATINGS 

Unless the accuracy of ratings is checked, they will be unacceptable 
to those rated and useless to the company. Hence an investment in a 



MERIT RATING 245 

rating program should allocate part of the time and resources to a check 
of ratings. There are a number of plans of evaluating the accuracy of 
ratings, some simple and some complex, but all are intended to do one 
or the other of two things. Some check the validity of ratings or the 
accuracy with which ratings really measure the factors that they set out 
to rate. Thus, if a rating plan purports to measure, among other things, 
"initiative," it is valid if this trait is accurately appraised. Other tests 
check the reliability of ratings or the consistency with which ratings are 
made. Thus, if a rater gives an employee the grade of "very good," let 
us say, on two successive ratings of "dependability," and the employee 
actually has attained that level both times, the ratings are reliable. And, 
finally, the accuracy of one rater as compared to another may be ascer- 
tained. 

1. Validity of Ratings. Measuring the validity of ratings is not 
easy because standards are seldom available against which to compare 
ratings. When an employee is rated for such a factor as "personality," 
for example, the very fact that he is being rated for it is usually an in- 
dication that a better method of estimating it is not available. Yet, by 
comparing ratings with various aspects of an employee's employment 
records and performance, adequate checks of validity can be obtained. 

Perhaps the simplest over-all check of validity is to compare ratings 
with the performance of employees. For example, when ratings of per- 
sonal traits compare favorably with ratings of performance, a smooth 
progression should be obtained when the data for all values are arranged 
from high to low. Somewhat similar in nature is a comparison between 
ratings and other measures of employees, such as psychological tests. 
Of course, the latter are not precise measures of validity because the 
psychological tests invariably have an error of validity. The existence of 
the "halo effect" is also a sign of low validity of ratings. This can be 
determined by examining ratings to note whether there is a tendency 
for raters to rate all other factors the same as some one factor about an 
employee with which they were particularly impressed, favorably or un- 
favorably. 

A check upon validity can also be obtained by comparing estimates 
of two or more raters on the same employees. For example, if two raters, 
A and B, rated a given employee as shown in Figure 49 (p. 246), the 
validity of one or the other, or both, is in error. The lines connecting the 
scores for each factor by each rater are called "profiles" and are com- 
monly used because they aid the eye in interpreting the ratings. Such 
differences in estimates are common because most raters tend to be 
somewhat easy or harsh. Hence the tendency of each rater must be dis- 



246 



PERSONNEL MANAGEMENT 



covered and either corrected by instruction or allowed for if given raters 
are too set in their ways. 

2. Reliability of Ratings. The reliability of ratings is ordi- 
narily checked by comparing the ratings of given raters from period to 
period. If an employee has improved in certain aspects or remained the 

FIGURE 49. Comparison of Profiles* 




I PERSONALITY 

Personal appearance and manner- 
isms. Ability to make pleasing im- 
pression and win confidence. 



H INITIATIVE 

Ease and vigor with which new task 
or problem is approached and work 
carried on. 



m HONESTY 

Honesty in doing own scholastic 
work. Trustworthy with money or 
property. 



IV RESPONSIBILITY 

Habits of class attendance. Work 
finished on time and properly pre 
pared. 



V INDUSTRY 

Application of efforts to a task — 
capacity for sustained effort. 



VI LEADERSHIP 

Ability to lead actions and thoughts 
of others. Initiative taken in accom 
plishing a task. 



VII MENTAL ALERTNESS 

Speed with which new ideas are 
grasped. Ability to understand new 
concepts. 



Inspiring 



No Response 



Slightly 



Antagonistic 
repellent 



Self-motivating 



Ne ids occasional 
stii mlation 



Capable of 
routine 
work only 



Needs 

constant 

supervision 



Very trustworthy 



Can't be trusted 




Exceptional 

ability to 

think reflectively 



Rater A 



Rater"B" 



* Excerpt from a form used at Ohio State University. 



same, the ratings should have increased in value or remained the same, 
as the case may be. When such comparisons are made for the first time, 
it will invariably be found that most raters have not made necessary 
adjustments in their estimates. Discussions with supervisors at this time 
will serve to clear up mistakes in using the rating form and in inter- 



MERIT RATING 247 

preting the various terms and descriptions. It is unwise to rely too 
heavily upon such comparisons as a check on the validity of ratings 
because employees are bound to change from period to period. Hence 
checks should be made also with other measures which indicate the 
relative changes in employees from period to period. For example, rec- 
ords that show how an employee's performance has changed can be 
used to determine whether or not sufficient allowances have been made 
in the ratings from period to period. Some companies also compare the 
estimates of a number of raters for the same ratees as a check on their 
validity. There is some question whether this is a test of validity or 
reliability, or both. In any event, its use is advisable for the good it will 
do in calling attention to variances in raters. 

3. Accuracy of Raters. It is also desirable to determine, first, 
which raters are more lenient than others and, second, which have a 
tendency toward the "halo effect/' Leniency of raters can simply be 
determined by averaging the ratings of each and then getting an aver- 
age of the averages. Any rater whose average is significantly off of the 
average should be checked for leniency or undue strictness, as the case 
may be. Another check on leniency can be obtained if two or more 
raters rate the same employees. Significant deviations can be readily 
checked. 

In the case of "halo" effect, as noted earlier, ratings are influenced 
by a particularly impressive characteristic of an employee. For example, 
a given supervisor may be impressed by the neatness of a particular em- 
ployee. Unconsciously or consciously, the supervisor proceeds to over- 
rate the worker on matters of dependability, initiative, co-operation, etc. 
Sometimes this tendency can be discovered by a simple examination of 
ratings. At other times interviews will be necessary to ascertain the 
degree to which given supervisors are susceptible to such errors. 

The foregoing checks of validity and reliability may be made by 
simple observation or by means of statistical correlations. As noted 
earlier, for example, a simple diagram of the estimates of two raters is 
sufficient to bring out the need for corrective measures. On the other 
hand, more complex measures can be derived by correlating statistically 
various aspects of ratings. 

QUESTIONS AND PROBLEMS 

1. Since merit rating is essentially a process of expressing opinions, as one 
executive has put it, what must be done to gain the confidence of em- 
ployees in such opinions? 



248 PERSONNEL MANAGEMENT 

2. Which employees in an organization should be rated? Can all be rated with 
equal ease? Explain. 

3. What is the difference between rating employee contributions and em- 
ployee characteristics? If employee contributions could always be measured 
accurately, would there be any need to measure employee characteristics? 
Explain. 

4. In designing a merit rating form, why is it essential to state as precisely as 
possible the objectives that are to be sought in the use of the plan? 

5. How is it possible to secure a good rating of an employee when only three 
or four factors are used? Is there not safety in numbers? 

6. Design a form of merit rating for rating students. Select the factors that 
you think are appropriate, arrange them, establish the weights for the various 
factors, and prepare the physical rating form. 

7. By what methods is it possible to minimize the "halo effect" and the tend- 
ency of raters to grade the rating form rather than the employee? 

8. Why is it undesirable to use merely the names of factors or the simple 
grades of "above average," "average," "superior," etc.? 

9. Some rating forms provide space wherein the rater provides specific ex- 
amples to illustrate the grading he has made on particular factors. What 
advantage is there in this practice? 

10. What is the theory behind the forced-choice method of rating? Is this not 
an indictment of executives? Explain. 

11. Since the key to the forced-choice questions is unknown to the rater, can 
this method be used to counsel with employees as can the other rating 
methods? Explain. 

12. Attempt to work up a list of forced-choice questions that might be used to 
rate your instructor. What difficulties do you encounter in this task? 

13. Why is it desirable that ratings be both valid and reliable? Which, in your 
opinion, is more difficult to achieve? Why? 

14. In the case of operative employees, who should do the rating? Is it desirable 
for the superintendent as well as the supervisor to rate each employee? 

15. Is it desirable to ask subordinates to rate their superiors? Explain. 

16. Why is it invariably necessary to overcome the suspicions of most executives 
regarding merit rating when it is first introduced? How may this be done? 

17. What are the relative merits of showing and not showing the results of 
ratings to employees? 

18. After ratings have been obtained for each employee, how far would you go 
in relating such ratings to wages to be paid? To need for training? To need 
of counseling? 

19- The following excerpt (see top of page 249) has been taken from an em- 
ployee rating form. What is your critical opinion of the form as illustrated 
by the selected excerpt? 



MERIT RATING 



249 



Leadership: 

Rate this executive's ability 
to gain co-operation and 
to direct others. 



Appearance: 

Rate his personal neatness, 
dress, and attractiveness. . 



Superior 



Above 
Average Average 



Fair 



Poor 



Superior 



Above 
Average 



Average 



Fair 



Poor 



20. List the factors that can be expressed in quantitative terms (units or per- 
centages) that might be used to measure the accomplishments of a super- 
visor or the department for which he is responsible. 



CHAPTER 



13 



Training Operative Employees 



TRAINING AND EDUCATION 

This and the next chapter are devoted to a study of training in industry, 
and the two chapters following these are concerned with education. The 
term "training" is used here to indicate any process by which the apti- 
tudes, skills, and abilities of employees to perform specific jobs are in- 
creased. This task may be contrasted with that of increasing the knowl- 
edge, understanding, or attitude of employees so that they are better 
adjusted to their working environment. The term "education" is used 
here to denote the latter task. 

To clarify these terms, the example of a trainee on a drill press may 
be considered. Teaching him how to operate the drill press is called 
"training," whereas gvvmg him a course in economics is called "edu- 
cation." The two may go hand in hand, as in the case of a supervisor 
who, while showing an operator how to seal a package, also talks about 
the sales policies of the company and their importance to each factory 
employee. 

Although education in attitudes is often undertaken at the same 
time as training, and wisely so, it is better for discussional purposes 
here to take up the two phases of learning separately. The principles 
and practices of acquiring skills can be viewed, thereby, apart from the 
process of education or "attitude training," as some prefer to call it. 

In the present chapter, training of operative employees is taken up 
under the following major headings: 

1. Justification and scope of training 

2. Courses and programs of training 

3. Factors in a training program 

4. Evaluation of training program^ 



JUSTIFICATION AND SCOPE 

One of the first questions that must be answered regarding training 
is whether or not the cost is justifiable. The simplest argument in favor 

250 



TRAINING OPERATIVE EMPLOYEES 251 

of a formal training program is that a company pays for a training 
program whether it has one or not. Some executives conclude that they 
do not have any training costs because they do not have a training 
program. That is far from the truth. A few minutes of thought will 
suffice to show how wrong they are. Let us take the case of a company 
that has no program. Are all their employees hired with skills and 
abilities and aptitudes equal to the jobs to be done? Do their employees 
learn nothing while they are working? Whose machines, materials, and 
space are employees using while they are "learning" by themselves? Do 
they never make mistakes that could have been avoided? Do they never 
scrap usable materials? Are they fully acquainted with company policies, 
practices, and procedures when they come on the payroll? The answers 
will show that the employees are conducting a costly educational pro- 
gram, for which the company is unwittingly footing the bill. 

Viewed positively, the values of training, it can be shown, are not far 
to seek. First, training brings about an improvement in employee skill, 
which in turn increases the quantity and quality of output. Second, this 
increase in primary objectives will find a reflection in increased returns 
to employees; personal rewards are affected by individual productivity. 
Third, the relative amount of equipment and material required to pro- 
duce a unit of output is decreased. Fourth, executive effort will tend to 
shift from the disagreeable necessity of correcting mistakes to the more 
pleasant task of planning the work of and encouraging expert workers. 
And, last, the general tenor of relations between employees, as well as 
their individual morale, will tend to be more wholesome, resulting in 
more pleasant and satisfactory working conditions. All these objectives, 
it is worth repeating, may be sought without adding to company 
budgets. The money is being spent, so it may as well be spent wisely. 

Although all employees should undergo training, all need not be 
trained in the same amount, and seldom can all be trained at the same 
time. Company facilities for training are seldom sufficient to under- 
take such a broad program. Hence the guiding principle should be that 
of attacking training problems where the needs are the greatest. After 
urgent training needs are taken care of, those with lower priority should 
be served. 

As yet, standards as to the amount of training that should be pro- 
vided on various types of jobs are practically nonexistent. Even in the 
field of apprentice training, practice differs considerably. In some trades 
the apprentice period is two years, and in others it is as high as seven 
years. But compared to this, other types of training are variable be- 
yond mention. Hence each company must work out time standards of 



252 



PERSONNEL MANAGEMENT 



training for itself, changing them as their experience warrants. Stand- 
ards should be set for the following: 

1. Over-all length of course in calendar or working days 

2. Total hours of training time 

3. Hours of training by days and weeks 

4. Proportion of day assigned to various classes of training 



COURSES OF TRAINING 

Many approaches to training are being used in industry. To describe 
and examine them all is beyond the scope of this chapter. However, the 



FIGURE 50. Graphic Presentation 
Training Programs in th 



of the Approach to Nonsupervisory 
e Automotive Industry* 






'&$*[' ' ^We/ INCREASING THE 

inrru.ui-i? /EFFICIENCY OF YOUR 

MECHANICAL OPERATION 

:■■}.:■■(. ■ •■-.■■■■■■•■ ■- PW PRESENT WORKING FORCE 

?>f !F YOU HAVE T > ME ™, I REPLACEMENTS NECESSI- 
t% L ve «MW* *t \ TATED BY SELECTIVE 
* m " v f0* . \SERVICEOR BY NORMAL 

#^V>x / //ATT 

$ * ct 









.* P. 









tf XV 



CONVERSION TO , 
WAR WORK, OR FROmY^oO ^ 
ONE TYPE TO ANOTHER 



10 



cMA* 



i«" a» 



-* z . 



NOM 



.REPETITWE 



REQUIRING DIFFERENT 
TYPES OF SKILLS. 



HECHANICAL OPERATION 



PJOO HAVE TIME TO 



EXPANSION OF YOUR /GJVe Tf? 4/W " '" 

WORKING FORCE IN THE /^""Afty ^ ' N,G Pr £L( - 



tofc 



ro 



p "rr, 



SAME OR RELATED /y^ ^Oft^ ' "' r //y s 






V 



R » sv& ^ 



^ 

«•>>. 



«*»»« 



cesW 



-<&£ 



.5?*u 



i?T CN 



VESTVBOLE 



S/0^ 



In the center circle are listed the problems generally faced; in the second circle, the 
different situations involved; and in the outer circle, the methods recommended to meet the 
specific problem. 

* Source: Training and Upgrading (report of Automotive Council for War Production) (Detroit), p. 6. 



TRAINING OPERATIVE EMPLOYEES 253 

more common methods of training operative employees are taken up 
now. The types of training are not mutually exclusive but invariably 
overlap and employ many of the same techniques. For example, Figure 
50 illustrates graphically the types and methods of training that may be 
used to serve various purposes under various conditions. Which is best 
for a given need deserves careful study. 



ON-THE-JOB TRAINING 



dW 



Undoubtedly, training is most commonly done on the job. It re- 
quires no special school, the student is being trained at a point where 
no "changeover" will be required, and his output adds to the total of 
his department. Favorable though the situation may be, most training 
on the job is not economical. Ordinarily, no course of progressive and 
correlated materials of instruction is prepared; the instructors are ill 
prepared themselves and usually not very interested in their students 
because of the pressure of other duties; and the students, whether in the 
office or in the shop, often feel lost and ill at ease in the maze of pro- 
duction routine. 

Since on-the-job training is commonly used and is likely to continue 
to be, the requisites of a good program are now described. In the first 
place, what and how the learner is to be taught should be determined 
and preferably set down on paper, at least in major outline. Second, the 
instructor should be carefully selected and trained. Such courses as 
"Job Instructor Training," to be discussed in the next chapter, should 
be given to trainers. It is well for the supervisor to do the training him- 
self if time will permit, because it will give him a favorable opportunity 
to get acquainted with the new worker and to "sell" himself and the 
company to him. When time does not permit the supervisor to do this 
work, the next best practice is to have a departmental trainer. When 
this is not practical, a seasoned and understanding worker should be 
appointed to teach the new worker. But it is well to pay such part-time 
instructors a bonus for each learner trained, so that they will not hurry 
this responsibility in order to return to their own duties on which incen- 
tive payments may otherwise be lost. And, third, a definite follow-up 
schedule should be provided, so that the results of the training and the 
progress of the learner can be established. In this way all instructors 
will be more likely to do their work effectively. 

VESTIBULE TRAINING £>Y\ 

In "vestibule" training, employees are taken through a short course 
under working conditions that approximate actual shop or office condi- 
tions. It gets its name from the resemblance of the school to a vestibule 



254 



PERSONNEL MANAGEMENT 



through which one passes before entering the main rooms of a house. 
Such a course usually takes from a few days to a few weeks at the most 
and is used where the acquisition of a few skills is the goal. Thus train- 
ing may be given to newly hired shop clerks on how to fill out various 
shop papers, such as time reports and departmental inventory cards. Or 
lessons may be given to clerks who have been hired to operate, let us 
say, comptometers. As a result, they will be able to do the work required 
of them when they step into the departments for which they were hired. 

Vestibule training has the advantage of training relatively large 
numbers of people in a short period of time without disturbing the flow 
of shop or office routines. Moreover, the employees can be adjusted to 
actual conditions under guided direction and gradually speeded up as 
they gain confidence in themselves. In addition, misfits or poor prac- 
tices can be eliminated before actual production conditions are encoun- 
tered. 

Vestibule training, however, requires the duplication of shop or office 
facilities in a school area. Consequently, it must be limited to types of 
instruction in which the machinery used is not too expensive to install 
in a school or which can be used, on and off, as employment demands, 
without excessive overhead cost. Moreover, all types of machines in 
actual use can seldom be practically placed in a vestibule school; so it 
is limited in application to those jobs in which there is a high turnover 
or a continually increasing demand for workers. 

APPRENTICESHIP TRAINING 

Apprenticeship training pertains to training in which the course of 
work varies from a minimum of two years in some trades to six or seven 
in other fields. It is used in trades, crafts, and technical fields in which 
proficiency can be acquired only after a relatively long period of time 
in direct association with the work and under the direct supervision of 
experts. A partial list of trades in which apprentice training is practiced 
includes the following: 



Barbers 

Boilermakers 

Bricklayers 

Carpenters 

Coppersmiths 

Coremakers 

Die sinkers 



Draftsmen 

Drop forgers 

Electricians 

Engravers 

Furriers 

Horseshoers 

Jewelers 



Lens grinders 

TVf flrfrinis tq 

Mechanics 

Millwr ights 

Molders 

Painters 

Plumbers 



Printers 
Shipfitters 
Stone masons 
Toolmakers 



Inasmuch as a number of groups, in addition to business itself, are 
interested in apprenticeship training, those who carry on such training 



TRAINING OPERATIVE EMPLOYEES 255 

should be aware of these groups. First, the federal government is in- 
terested in apprentices, for one thing, because of the Wages and Hours 
and Walsh-Healey Acts. If an employer desires to pay apprentices less 
than amounts regularly prescribed by these laws, apprenticeship agree- 
ments must be covered in writing and submitted to the administrators 
of these acts in order to obtain a certificate of exemption. The agree- 
ment must describe the term of apprenticeship and probation, the major 
processes in which the apprentice is to receive instruction and experi- 
ence, the graduated scale of wages to be paid, the amount of time spent 
at work and in school, and any special provisions. 

More recently, the federal government became directly interested in 
apprentice courses through the allowances granted to such learners 
under the G.I. Bill of Rights and the Vocational Rehabilitation Pro- 
gram. Thus, in the case of World War II veterans and post-Korean 
veterans who are apprentices and whose courses of study and work are 
approved by the Veterans' Administration, their pay from their em- 
ployers will be augmented in varying amounts according to dependents 
and service-incurred disabilities, if any. 

The federal government, through its Federal Committee on Appren- 
ticeship, has also co-operated with state apprenticeship councils to 
standardize the apprenticeship practices. More than half the states have 
such councils. In each of these states, provisions are suggested regarding 
amount of training, wages, and standards of work. Another aim is to 
protect the apprentice who accepts lower remuneration for relatively 
long periods of time. Otherwise, some employers might use apprentice- 
ship to secure low-cost labor. 

Unions, too, have interested themselves in apprenticeship programs. 
On the one hand, they are interested in establishing apprentice quotas 
in order to prevent displacement of fully trained workers by appren- 
tices. Second, they are interested because the apprenticeship program 
can be used to restrict entry into a trade or industry. As a consequence, 
such courses may well be the subject for collective bargaining. 

INTERNSHIP TRAIN ING 

Internship training refers to a joint program of training in which 
schools and business co-operate. Selected students carry on regular 
school studies for periods ranging from three to nine months and then 
work in some factory or office for a designated period of time, alter- 
nating in this fashion until the course is completed and the student is 
ready to accept permanent employment. The training is usua lly con- 
ducted in connection with highly skilled orprofessional types or train- 



256 PERSONNEL MANAGEMENT 

ing* . Trade and high schools often co-operate with industry in this way 
to train various vocational help. And it has been employed by industry 
and colleges for training for management and engineering positions. 

By such training, it is hoped to gain a good balance between theory 
and practice. In addition, students may gain a better understanding of 
the "school books" by having the practical background against which 
to visualize classroom principles. Moreover, the students who have a 
definite vocation or profession in mind are likely to be better students 
because they can see the practical side of their objectives being achieved. 
From the company's side, the gain is in a better-balanced employee and 
one who has already been interned to its practices. 

Internship has its disadvantages. It is such a slow process as to try 
the patience of the student as well as the instructor or supervisor. It 
takes so long that one or both of the parties involved may become dis- 
couraged. It suffers when business depressions call for layoffs; and, 
under it, present employees feel that the interns are being favored at 
their expense. However, within limits, it is a desirable plan to follow 
as part of a complete program in which other employees, as well as 
the selected classes of prospective employees, are given consideration. 

LEARNER TRAINING 

During periods of heavy demand for and short supplies of semi- 
skilled labor, industry is faced with the task of training "green" hands 
or "learners." The learners usually receive a program of education and 
training. This is necessary because the learners come into industry with- 
out the rudiments of industrial knowledge. In one case, for example, it 
was found desirable to send learners to public vocational schools for a 
period of several weeks for the study of arithmetic, simple shop mathe- 
matics, shop science, reading and using gauges, reading simple blue- 
prints, and operation of shop machines. After this training and educa- 
tion thev3£X£«assigned to regular production jobs. 




A number of agencies and groups have co-operated w ith industry in 
the solution of its training problems. vVocational, correspondence, trade, 
and evening schools have been a constant source of supply of semi- 
skilled, skilled, and technical workers. The usefulness of these schools 
can be seen in the figures from one community in which 1,200 out of 
8,000 workers were attending night school. Of course, their training, 
except when internship arrangements have been worked out, must be 
of a sufficiently general nature to qualify graduates for any one of a 



TRAINING OPERATIVE EMPLOYEES 257 

number of employers. Some communities have organized committees to 
point such training toward the needs of particular employers. For ex- 
ample, in Cleveland various programs for solving the wartime shortage 
of skilled workers were worked out through the joint effort of the Cleve- 
land Personnel Association, Cleveland Chamber of Commerce, Cleve- 
land Board of Education, and the federal agencies of Works Progress 
Administration and the National Youth Administration. 1 On a broader 
scale local community plans of employment and training have been 
organized upon the recommendation of a committee to study employ- 
ment. In each community there is an unpaid committee on which serve 
representatives from such groups as organized labor, the school board, 
the American Legion, the employment service, and industry. 

The federal government, through a number of agencies, has assisted 
industry in its training work. Vocational training is given particular 
support by providing for contribution of federal funds to match con- 
tributions by the states. The Smith-Hughes Act of 1917 apportioned 
seven million dollars annually for such programs. Subsequent amend- 
ments in 1934 (the George-Ellsey Act) and in 1936 (the George- 
Deen Act) increased the federal contribution. Federal support is also 
given to vocational training of the handicapped and veterans. 

The federal government also gives assistance in apprentice training 
through its Apprentice Training Service established in 1937 as a section 
of the Division of Labor Standards, the United States Department of 
Labor. Agencies interested in such vocational education are illustrated in 
Figure 51 (p. 258). A brief outline of its cost-free services is as follows: 

1. Training Apprentices. Assistance is given in improving or inaugurating 
apprenticeship programs and providing suggestions on methods and 
techniques relating to the operation of such programs. 

2. Training Advancing Workers. Advisory assistance is provided regarding 
the training of advancing workers. These are workers being trained for 
skills beneath the journeyman level but which require a fairly high degree 
of skill. The period of training for such workers is shorter than for 
apprentices, but the problems of training are comparable. 

3. Labor Relations Affecting Training. Assistance is provided in dealing 
with labor problems encountered with the operation of on-the-job training 
programs. Typical problems applying to training include: seniority rights, 
wages, number to be trained, hours of work, establishment of training 
schedules and breakdown of operations, establishment of shifts, standards 
of selection, and supervision of trainees. 

4. Supplementary Labor Agreements. In plants where employees are organ- 
ized, assistance is provided in preparing supplements to established bar- 



1 J. W. Vanden Bosch, "Training People for Factory Work," Factory Management and 
Maintenance, September, 1940, pp. 54-60. 



258 



PERSONNEL MANAGEMENT 



gaining agreements where the existing agreement is not sufficiently flexible 
to cover such situations as war training and employment. 
5. General. In many instances assistance is also provided with regard to 
employment requirements of federal or state laws and problems of pro- 
duction as they relate to training. 

During the war, the federal government also performed yeoman 
service through its efforts in advanced training and education. Its work 

FIGURE 51. Federal-State-Local Relations in Vocational Education* 



PLANS AND REPORTS BRANCH 
Assistant Director 
Statistical and Fiscal Staff 



OFFICE OF ASST COMMISSIONER 

FOR VOCATIONAL EDUCATION 

Assistant Commissioner 



AGRICULTURAL 

EDUCATION SERVICE 

Chief of Service 



BUSINESS 
EDUCATION SERVICE 
Chief of Service 
Specialists 



HOME ECONOMICS 
EDUCATION SERVICE 
Chief of Service 
Speci: 



PROGRAM PLANNING BRANCH 
Assistant Director 
Program Pla-ining Committee 



TRADE AND INDUSTRIAL 

EDUCATION SERVICE 

Chief of Serv 



OCCUP. INFORMATION 
AND GUIDANCE SERVICE 
Service 
Spec 




* Source: Federal Security Agency, Office of Education, Division of Vocational Education. 

in connection with the Training within Industry Program was particu- 
larly successful and will be discussed more fully in the next chapter. 
in the next chapter. 

RETRAINING AND UPGRADING 

When demands for semiskilled and skilled labor exceed the supply, 
industry must undertake programs to retrain and upgrade unskilled and 
semiskilled employees. For example, war conditions create a need for 
such training because most companies have to change from civilian pur- 
suits to war work and have to increase their output at the same time. 
Hence, on the one hand, employees who had skills for making automo- 
l £S, let us s ay, ha ve to be retrained to m ake rankj Alld,' Oil L'lll Pthe» 
Kana, many who are performing semiskilled jobsmust be given addi- 



TRAINING OPERATIVE EMPLOYEES 259 

tional training so that they may be upgraded to skilled jobs. Their jobs 
are filled by upgraded unskilled workers, and these in turn are replaced 
by learners, many of whom may be women with no industrial experi- 
ence whatsoever. 

Courses in upgrading and retraining are much the same as other 
training methods discussed thus far. Their unique feature lies in the 
fact that otherwise experienced workers are given additional training 
to handle new and more difficult assignments. The problem is to pick 
and choose course material so that trainees can take on their new jobs 
relatively quickly. For example, one company that took forty-eight 
months on its toolmakers' apprentice course, selected parts from it so 
that operators could be taught to perform a few skilled jobs in from six 
to eighteen months. Such intensive training in which students spent 
approximately 25 per cent of their time in class and 75 per cent on 
machine operations built up a working force that could meet war pro- 
duction demands on time. 

FACTORS IN A TRAINING PROGRAM 

The operation of a successful program requires that due considera- 
tion be given to a number of factors. These include ( 1 ) the organiza- 
tion of a training program, ( 2 ) planning the program, ( 3 ) selection of 
trainees and instructors, and (4) adherence to rules or principles of 
learning. 

ORGANIZATIONAL ASPECTS 

A training program has a much better chance of being effective if it 
is well organized. To begin with, one person or unit in the organization 
should be made responsible for training. In a small company, this 
means that a line executive will have to be given this responsibility. In 
larger organizations, the personnel manager or a training director 
should be assigned the task of planning, organizing, and evaluating the 
program. Such division of responsibility should be made with the clear 
recognition that the foremen, supervisors, and other executives assisted 
by the designated teaching officers possess ultimate authority over and 
responsibility for training within their respective units. As an example 
of this, Figure 52 (p. 260) shows the various types of training for which 
a training co-ordinator in one company was made responsible for plan- 
ning and co-ordination. Fig. 53 (p. 261) shows how the execution of 
some of the training work was actually assigned to the shop departments. 



260 



PERSONNEL MANAGEMENT 



Second, a training program must be "sold" to the top level of the 
organization to be most effective. Unless the interest and prestige of 
the administrative levels are behind it, a training program will be ac- 
cepted with reluctance by the lower levels. As a consequence, some 
companies follow the practice of starting various training programs, in 
synopsis form if not in complete outline, at interested top levels and 



FIGURE 52 



AREA 



PLANT 
-SERVICE 
TRAINING 



TRAINING AIRCRAFT WORKERS 
PHASE TITLE OF PROGRAM 

^QUALITY CONTROL 1 INSPECTION ! 



PERSONNEL- 



MANUFACTURING 
AND PRODUCTION- 
CONTROL 



< 



SUPPLEMENTARY- 



^PRE-PRODUCTION- 



PLANT 3 SUB AND FINAL 

-MANUFACTURING^ ASSEMBLY 

TRAINING \ 



EXPERIMENTAL- 



SPOT TECHNICAL 
I MANUFACTURER'S- 
v REPRESENTATIVE ) 



^PRE-SUPERVISORY- 



PLANT 

-SUPERVISORY 
TRAINING 



PARTS CONTROL 

PRODUCTION CONTROL IN SERVICE ( ESMWT ) 

TIME STUDY AND METHODS 



CADETTE "" 

ENGINEERING MATHEMATICS 

MINOR DESIGN PROBLEMS 

LOFT ENGINEERING 

PRINCIPLES OF AERONAUTICS I ESMWT \ 



BLUEPRINT 

MATHEMATICS 

MATERIAL AND PROCESSES 

MACHINE SHOP 



H DOWNTOWN SCHOOL! 



MACHINE SHOP ( PRE-PRODUCTION AND 

ON-THE-JOB) 
STAINLESS STEEL 
TUBE BENDING 



FLAP INSTALLATION 

ARMAMENT 

ENGINE TESTING ( START. RUN AND STOP) 

HYDRAULIC 

STANDARD PROCEDURE 



-\ FABRICATION 



PLANT POLICY 

AND JOB RESPONSIBILITY- 
ICCS-I) 



ENGINE 1 START, RUN AND STOP 1 
GENERAL AIRCRAFT FABRICATION AND 
ASSEMBLY 










DEGREASING 
USE OF HAND TOOLS 
CARE OF CUTTING TOOLS 
DRILLS AND DRILLING 










RESPONSIBILITY AS A MANAGER 
RESPONSIBILITY AS A SUPERVISOR 
RESPONSIBILITY AS A TRAINER 










JOB INSTRUCTIONS TRAINING 
JOB METHODS TRAINING 
JOB RELATIONS TRAINING 








INDUSTRIAL RELATIONS 

PLANT ORGANIZATION 

OUALITY CONTROL 

COST. WASTE, SAFETY. ETC 

FUNCTION AND INTERRELATIONS OF DEPARTMENTS 



TECHNICAL- 
EXECUTIVE - 



| FINAL ASSEMBLY OPERATIONS | 

| HARVARD WAR PRODUCTION TRAINING I 



OPERATIONS 



RADIO AND ELECTRI. 

CAL 
GENERAL AIRCRAFT 

(PRE-FLIGHT) 
MACHINE SHOP 
SUB-ASSEMBLY 
RECEJVING 



MECHANICAL DRAWING 

I AND II 
TOOL DESIGN BEG AND 

ADV- 
ELEC MAINTENANCE 
E O- INTERPRETATION 



ASSEMBLY 
FINAL ASSEMBLY 
INSPECTION 
FABRICATION 
WELDING 
ELECTRICAL AND 
RADIO 



RIVETING 
BONDING 
SAFETYING 
RIGGING 

HYDRAULIC ASSEMBLY 
FUEL LINES 
STANDARD PARTS 
IDENTIFICATION 



gradually working the instruction down through the organization to the 
group for whom the instruction was originally planned. 

And, third, it is well to consider the role of the union in the organi- 
zation for training. This may involve such matters as courses of training 
to be installed, responsibility for selecting or restricting candidates, and 
evaluation of training work. These matters may be handled informally, 
through collective bargaining or through joint committees established 
for the purpose. In any event, it is probable that, with the passing 
years, union interest in training is likely to grow rather than diminish. 
Therefore, it is only good judgment to try to determine how best to 
work with unions in developing and operating a training program. 



TRAINING OPERATIVE EMPLOYEES 



261 



FIGURE 53. Training Organization Chart 



GENERAL MANAGER 



COORDINATOR 



ON-THE-JOB 

SUPERVISORY TRAINING 



SUPERINTENDENT 
RESPONSIBLE 



FOREMAN 
RESPONSIBLE 



NEW 
MAN 



NEW 
MAN 



FOREMAN 
RESPONSIBLE 



NEW 
MAN 



NEW 
MAN 



FOREMAN 
RESPONSIBLE 



NEW 
MAN 



NEW 
MAN 



FOREMAN 
RESPONSIBLE 



NEW 
MAN 



NEW 
MAN 



ETC 



SET-UP MAN OR OLD 
EMPLOYEE RESPONSIBLE 



NEW 
MAN 



NEW 
MAN 



NEW 
MAN 



SET-UP MAN OR OLD 
EMPLOYEE RESPONSIBLE 



NEW 
MAN 



NEW 
MAN 



NEW 
MAN 



X 



ON-THE-JOB 

MACHINE OPERATOR, 

ETC TRAINING 



SUPERINTENDENT 
RESPONSIBLE 



SET-UP MAN OR OLD 
EMPLOYEE RESPONSIBLE 



NEW 
MAN 



NEW 
MAN 



NEW 
MAN 



SET-UP MAN OR OLD 
EMPLOYEE RESPONSIBLE 



NEW 
MAN 



NEW 
MAN 



NEW 
MAN 



ETC 



PLANNING THE PROGRAM 

Along with a good organization, careful planning is a most impor- 
tant prerequisite of training. When such aspects as where, who, how, 
what, and when are preplanned in a training program, the result will be 
fewer mistakes and better trainees when the program gets under way. 
An excellent example of this is seen in Figure 54, which illustrates the 
results obtained from a careful study that led to the building of an 
effective training program. The lower curve in this chart shows how 
much progress might be expected in a year from "normal efficiency 
growth," meaning the happenstance methods of learning in most 
offices. By developing a "procedure of training," employees attained in 
three months results which ordinarily took a year. And when to this 
training was added instruction aimed at improving the attitude of the 
employee towards his work and his fellow workers, the relative ef- 
ficiency attained by employees within a year was more than double. 
Anything which can double efficiency with the relative inexpensiveness 



262 



PERSONNEL MANAGEMENT 



of planned training, such as this program has, certainly proves its value. 
Another aspect of planning is that of building training programs on 
a good foundation of, first, job and man specifications and, second, meas- 
urements of what employees actually know. This follows from the 
proposition that a training program should be based on the following 
formula: what should be known less what one knows equals what must 
be learned. Thus job and man specifications serve to disclose the kind 
and degrees of skills, abilities, and aptitudes required on various jobs, 
whereas checking of employees through records of past experience and 



FIGURE 54. Learning Curves' 



EFFICIENCY 
100% 



50% 




TIME 



3 MONTHS 6 MONTHS 9 MONTHS 1YEAR 



* Source: E. F. Wonderlic, Procedure and Attitude Training (Personnel Series No. 47) (New York: American 
Management Association, 1941), p. SO. 

education, interviewing, testing, and surveys of difficulties encountered 
on the job reveal their current status. The differences shown by these 
two broad investigations should provide an answer to the question of 
how much training must be allowed for in the program of a company. 



SELECTION OF TRAINEES AND INSTRUCTORS 

Another basic factor in training is to select trainable employees. In- 
asmuch as training costs money, expenditures are warranted only for 
those from whom the greatest returns will be received. Thus higher pro- 
duction results are obtained sooner at a lower training cost. Employees 
may also be preselected for various types of training by having detailed 
knowledge of their past experience and training. An example of a form 
which has been used to obtain this information is illustrated in Figure 
55. In this connection, testing programs are highly worth while. As 



TRAINING OPERATIVE EMPLOYEES 

FIGURE 55. Experience Record* 



263 



EXPERIENCE RECORD 



NAME: 



ADDRESS: 



CLOCK NO.. 
S.S. NO 



For the purpose of determining the qualifications and experience of the employees as to their 
mechanical experience for defense work, the questions below are submitted: 



1. Grade completed in school 

2. Have you completed a school course in: 

(1) Arithmetic 

(2) Algebra 



(3) Geometry 



3. Have you served an apprenticeship as: 
(1) Machinist (2) Toolmaker_ 

4. Can you read blueprints? 



(4) Trigonometry. 

(5) Shop (Mach.) 



(3) Diemaker. 



(4) Any other. 



5. Can you read micrometers?. 

6. Can you read a Vernier? 



7. Have you had experience operating the following machine tools? 



Tool- Specify 
room Type 



Tool- Specify 
room Type 



(1) Lathe 

(2) Multiple Turn- 
ing Machine 
(Bullard, etc.) 

(3) Milling Machine _ 

(4) Drill Press 

(5) Drill Press (Multi). 

(6) Grinder External _ 

(7) Grinder Internal 

(8) Planer 

(9) Shaper 



(10) Diamond Boring Mach. 

(11) Auto. Screw Mach. 

(12) Hand Screw Mach. 

(13) Chucking Machine 
(New Britain, 
Cleveland, etc.) 

(14) Gear Cutter 

(15) Broaching Mach. 

(16) Semi-Automatic 
Lathe 

(17) Any other 



School 



Practical 



8. Have you had any training in mechanical drawing or design? 

9. Have you had experience as ■ 



(1) Mach. shop 
foreman 

(2) Mach. shop 
inspector 

(3) Toolmaker 

(4) Diemaker 

(5) Machinist 

(6) Tool and gage 
grinder 



(7) Cutter grinder 

(8) Tool hardener 

(9) Machine repairman 
(10) Welder 



(11) Boring mill 
(ioolroom) 

(12) Layout (bench) _ 

(Surface Plate). 

(13) Patternmaker 



(14) Instructor- 
Machine Shop 

(15) Indicate experience, if 
any, on manufacture of 
ordnance parts; if so, 
what parts 

(16) Any other (use reverse 
side if necessary) 



10. Please indicate any other mechanical qualifications (use reverse side if necessary). 



1 1 Indicate class of work you prefer 

12 Indicate class of work best qualified for. 



Your answers will be supplemented by further practical examination and demonstration 



Factory Management and Maintenance, October, 1943, p. 117. 



noted in an earlier chapter, employees selected by tests learn faster and 
better than nontested employees. 

The selection and training of instructors also is significant. Here is 
an excellent opportunity for supervisors. The supervisor who becomes 



264 PERSONNEL MANAGEMENT 

skilled in training methods can show the employees his interest in their 
welfare better than all the words in the world. By working with them 
to help them better themselves, he will gain their loyalty and their 
confidence. If "lead" men or "gang bosses" are used as trainees, these, 
too, deserve careful preparation, if training time and effort are not to be 
wasted. In the case of regular full-time instructors, special care should 
be exercised to see that such individuals not only know the rudiments 
of instruction but also like to teach and have an interest in the student. 

RULES AND PRINCIPLES OF LEARNING 

Although the subject can be little more than scratched, it is desirable 
here to note some rules and principles that should be followed if a 
training program is to be effective. To begin with, in planning a pro- 
gram, it is wise to determine how frequently instruction should be given, 
and the effect of recency, types of materials, and visual and audio devices 
upon the learning process. The conditions and atmosphere of instruc- 
tion are also items to be considered. 

More specifically, industrial training is more effective, too, when 
shop instruction is correlated with classroom instruction. This follows, 
not only because the learner can see the improvement he is making in 
actual production, but also because of the principle that the more specific 
and concrete the material of instruction, the better the learning. All of 
this suggests, too, that it is imperative to select trainers who can stimu- 
late the learners to exert themselves. An otherwise admirable plan of 
training will almost inevitably fail to achieve desired results if this 
principle of instruction is violated. 

Of interest, too, is the fact that in teaching it is sometimes best to 
start describing the middle steps of an operation rather than the first 
or last, as is usually done. Students who are pushed at the most rapid 
rate of which they are capable do better than when a more leisurely 
pace is maintained. It is also well to alternate lectures, demonstrations, 
and actual shop practice at carefully worked-out time intervals to get 
the best results. And to cite one more principle of this nature, the in- 
structor should stand beside the student when demonstrating so that the 
student will not have to reverse the images he receives, as is true when 
the instructor stands in front of him. 

Another category of rules pertains to the media and mechanics of 
instruction. These are so numerous that only a few suggestions can be 
mentioned here. 

1. Use graphical, illustrative, and sample materials freely and frequently. 
Such matter as charts, drawings, and models increase the effectiveness of 
teaching and learning. 



TRAINING OPERATIVE EMPLOYEES 



26! 




2. Use good classroom facilities and select the best possible shop areas foi 
instruction p urpos es. 

3. Dete rmine the best time for classroom work. Lectures ordinarily should 
not be longer than fifty to sixty minutes; discussion periods can be longer, 
prnyir lfH that t nrprrr)j<;<;ions of about ten minutes are provide d atter rorty- 
five minute^ . "" ' "■ 

4. Examinations or tes ts should be scheduled at appropriate i ntervals in 
order to check the student and provide him with a sense of progress . 

Groups in training together should seldom be larger than thirty if disc us- 
sion is to be encouraged and if instructors are not to be overworke d. 

Questions should empha size 'how" and "why" rather than "yes" or "n o." 

The use of p ictures, whether shown bv movies, slides, strip slides, or othe r 
me'thods, cannot be -nvprstrpsspH/Tf has been discovered that thereby — 

a) Interest of students may be increased up to 40 per cent 

b) Their range of immediate understanding increased up to 25 per cent 

c) Their time for completing a course decreased up to 25 per cent 

d) Their retention of information increased up to 35 per cent v j 

\ V *4 




EVALUATION OF TRAINING PROGRAM 




Although it is contended here that training programs are well word 
their cost, it is nevertheless argued that the activities of training should 
be evaluated. This will not only result in getting more for the training 
dollar but also make it possible to improve training techniques and 
practices./ln the final analysis, the savings and improvements resulting 
from training must be set off against the cost of training, to determine 
the extent of positive advantage/ Such comparisons must be made on a 
month-to-month, company-to-company, or interdepartmental basis, to 
establish worth-while conclusions. 

The types of evidence which may be gathered to show savings and 
improvements include the following: 



2.^ 



Production factors 

a) Incre ase in output 
Decrea se in s crap 

Decreas e in unit times a nd unit cost of productio n. 
R eduction in space or machine requirements 



b) 
c) 
d) 

Labor facto rs 

a) Decrease in la bor turn over 

b) Decrease in a bsenteeism 

c) Decrease in nu mber and "severity of accid ents 

d) ' 



Betterment of e'mployee mo rale* 
e) Decrease in grievances and disciplinary action 
/) RecJ nrriOn in time to earn piece rat es" 
g) Decrease in number of discharges or quits 



266 



PERSONNEL MANAGEMENT 



When such information is gathered, the value of training will sel- 
dom be taken for granted or questioned. Yet it is not an onerous task to 
gather such data. In gathering them, care should be used to bring out 
the results of training by comparing the records of trainees with those 
of employees who were not trained. How this may be done is illustrated 
in Figure 56. This is a striking contrast between the efficiency of 

FIGURE 56. The Relation between Efficiency and Weeks of Training or Experience 
for Trainees and Beginners in the Operation of Disc Cutoff Machines* 

100 r- 



90 - 



£80 

>- 

u 



u70 - 



60 - 



50 




TRAINEES (A/=19) 



BEGINNERS (A/ = 5) ^ 



^ 



1 2 

WEEKS OF TRAINING OR EXPERIENCE 



Source: L. G. Lindahl, "Training Operations by Activity Analysis," Personnel, January, 1948, p. 304. 



trainees and those who learned on the job. Such data establish strongly 
the desirability^ planned training. 

Another way of evaluating training programs is that illustrated in 
Figure 57. Here is shown the progress made by two trainees, one who 
is "too good" for the job and one who is just right. Certainly, when it 
is possible to ascertain the future prospects of employees so early in their 
employment tenure, the tool which helps is deserving of favorable sup- 
port. 

A few words on evaluation also are in order from a legal and pro- 



TRAINING OPERATIVE EMPLOYEES 



267 



fessional point of view. Some training programs may have to be meas- 
ured in terms of legal requirements. For example, a company that de- 
sires to qualify war veterans under an approved learner or apprentice 
course must meet minimum standards on such matters as quantity and 
quality of instruction. In cases in which a company seeks exemptions 
under the Wages and Hours and Walsh-Healey Acts, such information 
must be available. Even when not mandatory, establishing such stand- 
ards is desirable in order to keep the planning of courses on a definite 
schedule and to stipulate times for evaluating training results. 



FIGURE 57. Learning Curves* 



PIECES PER HOUR 
100 



80 



60 



40 



20 



i i i i I i i i i I i i i i 
STANDARD OUTPUT 



.GRACE'S 
ACTUAL 
OUTPUT 




^: 



STANDARD 

.LEARNING 

CURVE 



QEJ I I I I I I I I I I 1 1 I I I III 

50 100 150 

HOURS OF TRAINING 



Grace Was Too Good 

Too good, that is, for this particular job. 
From the start, her progress (heavy line) 
was far better than standard. She'd worked 
before on repetitive jobs, and was glad to 
be transferred to the machine shop. 



PIECES PER HOUR 
100 



80 



60 



40 



20 



I I 1 1 I 1 1 1 1 I 1 1 1 1 
-STANDARD OUTPUT 


i I I l 


■ 






STANDARD 
- LEARNING y 
CURVE y? 




- 


- 




BETTY'S 
ACTUAL 
OUTPUT 


- ff 






- 


Mill 


1 1 1 1 


i i i i 


1 1 l,.l_ 



50 100 150 

HOURS OF TRAINING 

Betty? Just Right 

It paid to train her. Her learning curve 
(heavy line) practically coincides with the 
standard curve. She reached full production 
on the twenty-first day; consistently met 
standard without difficulty. 



* Source: A. R. Knowles and L. F. Bell, 
1950, p. 115. 



'Training Curves," Factory Management and Maintenance, Jui 



If the quantity of training is relatively unstandardized, its quality is 
even less so. To be sure, where federal or state agencies supervise voca- 
tional, learner, apprentice, and rehabilitation training, <6ome review of 
the quality of courses and instructors is made, but this is as yet largely 
personal and variable. There is little doubt, however, that the quality of 
training has improved in the last few years. A favorable sign is the for- 
mation of the National Association of Training Directors and local 
associations of training directors, with raising standards of industrial 
training one of their major purposes. 



268 PERSONNEL MANAGEMENT 

QUESTIONS AND PROBLEMS 

1. Is it desirable to separate training and education in actual practice? Explain. 

2. Assume that a union in a given company desired to operate a school for 
learners for that company. Comment upon this plan in terms of (a) the 
company in question and (b) the learners. 

3. Of two employees who are acquainted with each other and who have been 
hired at the same time for the same type of work, one can be placed on the 
job with very little training but the other requires extensive training. Need 
anything be done to keep either from developing a feeling of discrimination? 
What? 

4. Although on-the-job training is used more widely than any other plan, does 
this mean that it is the best plan of training operative employees? Explain. 

5. How would you justify the cost of a formal training program for an indus- 
trial plant? 

6. Why is it unreasonable for business to assume that the school system should 
provide it with trained personnel? 

7. What basic questions must be answered in establishing a training program 
for operative employees, in the shop, office, or salesroom? 

8. Why is it undesirable as well as unnecessary to give all employees doing 
the same amount of work the same kind and amount of training? 

9. What contributions can be made to training by job analysis, psychological 
testing, and merit rating? 

10. By what methods may the effectiveness of part-time instructors be increased? 

11. What is meant by "vestibule training"? When would its use be advisable? 
When not? 

12. Why do such varied groups as unions and governmental agencies concern 
themselves with apprenticeship training? 

13. What are the merits and demerits of the internship plan of industrial 
training? 

14. How should training plans be established in order to serve the needs caused 
by {a) rapid, but short-run, expansion and contraction of business and (b) 
long-run changes in volume and technology? 

15. If training is more effective under actual shop conditions, why not scrap the 
educational system and train everybody right from the start under practical 
working conditions? 

16. Write a report on the following experiment. Select some simple operation 
such as tying a particular type of knot or solving a mechanical puzzle. Select 
one which is unknown to your prospective students. Then select three 
"students." Explain the operation to each, starting with the first student at 
the beginning of the operation, starting in the middle of the operation and 
then going back to the beginning with the second, and starting at the end 
of the operation with the third student and then coming back to the first 
steps of the operation. Let each student try out the operation. Which method 
seems to work best? 



TRAINING OPERATIVE EMPLOYEES 269 

17. Discuss why the principles of good physical conditions of instruction are 
necessary. Are there any which might be dispensed with? 

18. Draw an organization chart of an actual company showing the place assigned 
to training. Is the location right, or too high or too low? 

19. How would you proceed to evaluate the effectiveness of a training program? 

20. Someone has said that most industrial jobs can be performed by workers of 
relatively low mental ability. If that is so, is emphasis upon a training pro- 
gram misplaced? Why? 



CHAPTER 



14 



Training of Executives 



SIGNIFICANCE OF EXECUTIVE TRAINING 

One of the most encouraging developments of training activities dur- 
ing recent years is the recognition given executive training. Earlier, few 
companies either considered such training necessary or gave it any 
thought whatsoever. Too commonly it was felt that anyone who was 
appointed to the management ranks at the supervisory levels or those 
who were moved up the executive levels either possessed leadership 
aptitudes and know-how or could acquire the required qualifications 
themselves. 

But anyone who has been given supervisory responsibilities without 
instruction and training knows how false such assumptions are. Indeed, 
appointees to supervisory positions are usually uniquely unfitted for 
their new positions. Almost without exception, the practice in most 
companies has been to select for supervisory positions those who have 
exhibited the most proficiency in technical work. Thus the fastest 
worker, the most skilled mechanic, or the most proficient technician is 
made the supervisor of his respective department when a vacancy occurs. 
Yet the qualifications which led to his selection are usually of no value, 
and, indeed, often a hindrance, in his new position. If he is to become 
successful, it usually requires a more or less extended period of stum- 
bling and disagreeable self -education. 

Nor do those who move up the managerial ladder have a happier 
experience when they must educate themselves. It is one thing to super- 
vise operative employees and another to supervise supervisors. The task 
of planning, organizing, and controlling major decisions of a company 
calls for skills and aptitudes that differ from those a minor operative 
executive must possess. And those who must solve the broad problems 
of and set policies for the company need experience and talents above 
those of the administrators of plans and policies. Yet the acquisition 
of needed knowledge, principles, and skills in these areas, too, has been 
left invariably to individual effort and the laws of chance. 

270 



TRAINING OF EXECUTIVES 271 

However, many companies have seen and are seeing the light. Train- 
ing at all executive levels, from supervisory through middle manage- 
ment levels to the top side, is receiving increased attention. And the re- 
sults of formal training programs at these levels are as one would expect. 
In such companies, executive leadership is improving, operational activi- 
ties are carried out more economically and effectively, managers look 
upon their jobs as a challenge and not as a chore, and the morale of 
well-directed employees is improved. 

To show how these results are attained, the material in this chapter 
is divided into the following parts: 

1. Types of courses developed for executive training at various levels 

2. Content of training materials 

3. Follow-up and evaluation of training results 

TYPES OF EXECUTIVE TRAINING PROGRAMS 

Experience with executive training programs is as yet too limited to 
warrant any positive conclusions regarding which types are best under 
various conditions. However, it is possible to suggest some of the more 
widely used practices and their conditions of application. A good sum- 
mary of plans of executive training and the purposes to which they may 
be put is provided in the diagram in Figure 58 (p. 272 ) , which displays 
the approach to supervisory training programs in the automotive indus- 
try. A description of various courses follows. 

ON-THE-JOB TRAINING 

Most commonly, executive training is done on the job. With or with- 
out formal guidance, most executives must eventually learn how to do 
their work while working. The advantages of this type of training are 
strong. The trainee learns the job under actual fire. He can size up his 
subordinates and, in turn, be appraised by them, without artificial sup- 
port or backing. He can demonstrate independently his latent leadership 
aptitudes. Some have argued that the best executives will naturally rise 
to their opportunities without the support of formal training. And it is 
also claimed that this "normal" progress up the executive ladder does 
not build up artificial hopes of understudies or destroy the initiative of 
those not specifically being groomed for promotion. 

However, undirected on-the-job training has many serious disadvan- 
tages. One no longer expects chemists, engineers, accountants, or de- 
signers to learn on their own. Yet the profession of management, where 
requirements are just as technical, is expected by many to be acquired 



272 



PERSONNEL MANAGEMENT 



"by ear." Hence companies whose practices are advanced are supple- 
menting unguided on-the-job training with recognition of formal train- 
ing in management. Moreover, on-the-job training is too costly, time- 

FIGURE 58. Graphic Presentation of the Approach to Supervisory Training 
Programs in the Automotive Industry* 



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* Source: Training and Upgrading (report of Automotive Council of War Production) (Detroit), p. 6. 



consuming, and ineffective in developing capable executives. Of course, 
geniuses may rise to the top by their own efforts, but there are more 
executive jobs than geniuses to fill them. Hence more realistic methods 
of developing executives must be sought. And, finally, on-the-job train- 
ing is wasteful, in that the lessons learned by one ? generation" are not 
transmitted efficiently to succeeding generations. 



TRAINING OF EXECUTIVES 273 

Although it has not generally been recognized until recently, the 
shift away from unguided on-the-job training is becoming more no- 
ticeable. Its use is defensible only in small companies which cannot 
afford to develop, or do not have available in the community, any form 
of training program. Or in periods of very rapid expansion, the ex- 
pedient recourse may be more or less unguided on-the-job training. 
However, as a general proposition, its continuance represents a failure 
to take advantage of better methods of training executives, some of 
which are now discussed. 

UNDERSTUDY PLANS 

Executive training by means of understudies also has its proponents. 
Under this plan each executive is assigned an understudy who, in ad- 
dition to his regular duties, is expected to acquire some familiarity with 
the tasks and practices of his superior. The understudy is thus expected 
to be prepared to take over his supervisor's work while he is away from 
the office. Moreover, he is groomed to replace the executive when a 
vacancy occurs. 

Whether the replacement is temporary or permanent, the understudy 
plan of preparation does seem to operate under favorable conditions. 
The trainee presumably is schooled in the atmosphere and position in 
which he will be expected to perform. As a consequence, he should 
become well acquainted with his responsibilities and the manner in 
which they are executed. 

The understudy system suffers from several disadvantages which may 
well outweigh its advantages. First, aspirants for promotion other than 
the selected understudy may feel that their chances are so remote that 
it is useless to exert themselves. Second, understudies themselves who 
have to wait for long periods for vacancies may become discouraged, 
particularly when they see some other learners whose apprenticeship is 
shorter fortuitously have vacancies open quickly. In addition, some 
executives, jealous of their positions, may feel unwilling to open their 
store of knowledge to potential replacements. Because of such real and 
practical personal complications, many companies prefer to place the 
race for promotions upon an open and unpreselected basis. 

ROLE PLAYING 

A method that has in recent years received much favorable attention 
is that of "role playing," which was first introduced as the psychodrama 
or sociodrama. Under this method, a group of supervisors meet in con- 
ference, and two are selected to act out some situation which is com- 



274 PERSONNEL MANAGEMENT 

monly encountered or is causing trouble. For example, the situation 
might be that of an employee who is seeking a transfer. Then one of 
the supervisors is assigned the role of the employee, and the second be- 
comes the supervisor. A few pertinent facts are decided upon, and then 
the two, without rehearsal, act out how the supervisor and employee 
would react. 

As the two act, the members of the conference observe, make mental 
notes, and evaluate the performance. After the drama is completed, 
others may be selected to act out the same situation, or a general discus- 
sion of the acting thus far may be reviewed. Often a recording is made 
so that the "actors" can review their own performances. 

The desirable features of this method may be seen in the following 
advantages which have been ascribed to role playing: 

1. The learner learns by doing, and puts what he has learned into immediate 
practice. This means a maximum of acceptance and utilization on the 
part of the trainee. 

2. The trainee assists in training himself. He is in front of a group of his 
colleagues when he is playing a part, and he knows what he says is being 
recorded. He is under pride's pressure and is anxious to turn in a good 
performance. Because of this he puts the same intensity of effort into 
his role-playing that he would in dealing with an employee in the shop. 
He can observe, sometimes for the first time, his own actions in a critical 
way. 

3. Sound recording encourages self -development; hearing his own voice 
seems to have a powerful effect on a person. Much discussion is eliminated, 
of course, by playing back the supervisor's part in the human relations 
skit, thus giving him an opportunity to point out many of his own mis- 
takes. Strangely enough, it was discovered that supervisors often became 
so absorbed in the role they handled that they lost sight of the use of the 
principles and techniques. Again, the recording gave them an opportunity 
to make a critical analysis, and thus evaluate their performance and the 
performance of a colleague. 

4. There is a high degree of learning by observation and listening. The 
competitive instinct makes each man do his best to excel. 

5. When a supervisor takes an employee's part in a skit, it gives him a real 
approach to the employee's position in a difficult situation. 

6. The whole procedure does an excellent job of improving the supervisor's 
ability to speak effectively and secure acceptance of his ideas. Recording 
and playing back the speeches is almost identical to the procedure used 
in training in public speaking. The real plus value of role-playing is that 
the case situations require the supervisor continually to seek acceptance of 
his ideas just as his job normally requires this in the shop. 

7. It enables management to separate those who talk a good job in training 
sessions from those who perform a good job in the plant. In certain in- 



TRAINING OF EXECUTIVES 275 

stances, we have noted a terrific drop in the performance of some persons, 
and on tracing it back have learned that there seems to be a direct correla- 
tion between good performance in role-playing and good performance in 
the factory. 1 

TRAINING WITHIN INDUSTRY 

An outstanding contribution to training of supervisors was made 
during World War II by the Training within Industry section of the 
War Manpower Commission. Its work was so outstanding that the 
methods which it refined and developed have much of permanent value 
to commend them. This group, made up of representatives from in- 
dustry, labor, and government, after much study and trial and error, 
came to the conclusion that supervisors require specific knowledge and 
skills if they are to do their jobs properly. The statement of TWI (as 
it is commonly known) on the subject of the needs of the supervisor is: 

Every Supervisor Has Five Needs 

1. Knowledge of the Work. Materials, tools, processes, operations, products 
and how they are made and used. 

2. Knowledge of Responsibilities. Policies, agreements, rules, regulations, 
schedules, interdepartmental relationships. 

These two knowledge needs must be met currently and locally by each 
plant or company. 

Such knowledge must be provided if each supervisor is to know his 
job and is to have a clear understanding of his authority and responsi- 
bilities as a part of management. 

3. Skill in Instructing. Increasing production by helping supervisors to de- 
velop a well-trained work force which will get into production quicker; 
have less scrap, rework and rejects, fewer accidents, and less tool and 
equipment damage. 

4. Skill in Improving Methods. Utilizing materials, machines, and man- 
power more effectively by having supervisors study each operation in order 
to eliminate, combine, rearrange, and simplify details of the jobs. 

5. Skill in Leading. Increasing production by helping supervisors to improve 
their understanding of individuals, their ability to size up situations, and 
their ways of working with people. 

These three skills must be acquired individually. Practice and experi- 
ence in using them enable both new and experienced supervisors to recog- 
nize and solve daily problems promptly. 2 

The Training within Industry Service assisted companies in giving 
their supervisors a start in acquiring these skills through four ten-hour 

1 Allan H. Tyler, "A Case Study of Role Playing," Personnel, September, 1948, 
p. 138. 

2 The Training within Industry Report (Washington, D.C. : War Manpower Com- 
mission, 1945). This report contains an excellent description of the development, opera- 
tion, and results of this program. 



276 PERSONNEL MANAGEMENT 

programs: job instruction, job methods, job relations, and program de- 
velopment training — 

I. Job instruction training 

A. How to get ready to instruct 

1. Have a time table. 

2. Break down the job. 

3. Have everything ready. 

4. Have the work place properly arranged. 

B. How to instruct 

1. Prepare the worker. 

2. Present the operation. 

3. Try out performance. 

4. Follow up. 

II. Job methods training 

A. Break down the job. 

B. Question every detail. 

C. Develop the new method. 

D. Apply the new method. 

III. Job relations training 

A. Get the facts. 

B. Weigh and decide. 

C. Take action. 

D. Check results. 

IV. Program development training 

A. Spot a production problem. 

B. Develop a specific plan. 

C. Get plan into action. 

D. Check results. 

Each of the foregoing programs was written up in "package form" 
so that they could be given almost identically anywhere by qualified 
instructors. The instructors originally were few in number, but, by 
following the practice of the learners becoming instructors to other 
groups, and so on, eventually over 23,000 TWI trainees had instructed 
1,750,650 in these courses. 

These courses have been described because they have so much to 
offer to those who desire to build short courses for supervisors. Obvi- 
ously, in thirty or forty hours it is impossible to train supervisors in these 
matters completely. But, in such time, supervisors can be instructed to 
an extent that will give them more confidence in themselves and more 
satisfaction from their work. 

Although the federal government no longer offers its help in con- 
nection with these war-born courses, some of the original founders of 



TRAINING OF EXECUTIVES 277 

these courses have organized a private nonprofit association to continue 
these useful programs of training. 

OTHER SUPERVISORY PROGRAMS 

TWI provided but one plan of supervisory training. A few other 
plans are now mentioned out of the long list of attempts to train this 
particular level of the executive group. Since many supervisors start 
out as group leaders with the primary responsibility of training and 
some simple supervision, an example of training for this initial stage 
of leadership is desirable. In one instance, a program has been devel- 
oped in which trainees are given a three-month course under the guid- 
ance of trained instructors and under shop conditions. The trainees are 
given work that is intended to provide working knowledge along tech- 
nical lines in the application of leadership qualities to improve produc- 
tion, in the workings of various line and staff departments, and in 
principles of supervision. 

In another program, emphasis is laid upon the development of better 
relations between supervisors and the upper levels of management. 
This is accomplished by bringing small groups of foremen into a series 
of full-day meetings, lectures, and conferences with top management. 
By means of a carefully planned schedule and topical outline, various 
aspects of company and supervisory problems are explained to and dis- 
cussed with the supervisors. In this way, the policies of the company can 
be instilled, and the association of top and supervisory officials leads to 
more friendly relations. After the foremen return to their jobs, a series 
of meetings is conducted with their immediate superiors and leaders 
of associate departments. Thus, from the top levels to his own depart- 
ment, the supervisor gets a feeling of working relationships that is most 
helpful to him and to the "family" for which he works. 

Another supervisory program is based upon guided reading of pub- 
lished literature. Books, bulletins, and magazine articles dealing with 
good foremanship are distributed to the supervisors. At intervals, con- 
ferences are held to discuss particular views, and tests are given to de- 
termine how much has been read and how well. 

POSITION ROTATION PLAN 

Another plan of training which has had some acceptance in industry, 
perhaps influenced by assignment shifts in military organizations, is that 
of rotating key and promising executives and subordinates. The assump- 
tions of such plans are threefold: first, that, by job rotation, executives 



278 PERSONNEL MANAGEMENT 

will tend to think in terms of managerial principles rather than the 
technical aspects of particular functional fields; second, that rotating 
will permit good executives to determine the functional fields in which 
they would prefer to manage; and, third, by gaining a broad view of 
interdivisional problems, the top positions in the company can be filled 
by better-qualified appointees. Against these values must be cited the 
disadvantages of the disturbances caused in inaugurating the plan and 
in the periodic changes of leadership in various departments and divi- 
sions. 

The "merry-go-round" plan of the Consolidated Edison Company of 
New York is an example of this type of executive training. The plan 
operates at both supervisory and "middle management" levels. Assign- 
ments of supervisors to the rotation plan are made by a committee of 
department heads, subject to the approval of the executive vice-presi- 
dent. Assignments of department heads are made by the senior vice- 
president and his committee of vice-presidents. The progress of ap- 
pointees is evaluated by the respective committees. The appointees are 
removed from the plan, reassigned, or kept on their jobs as the com- 
mittees decide. Moving days come twice a year, on the first of April and 
the first of October. In order to prevent disruption of operations in the 
units to which trainees have been moved, the policy is followed of not 
moving too many executives out of any one unit at the same time. In 
this way, the experienced men help to stabilize operations while the new 
appointee is getting his feet on the ground. 

Some of the more important advantages which this company has de- 
rived from this plan have been stated as follows: 

a) Provides a well-rounded training and background of experience for the 
individual, familiarizing him with many other phases of the Company's 
operations. The individual so trained considers his problems and makes 
his decision more intelligently in the light of their effect on the opera- 
tions of the organization as a whole. 

b) Streamlines the organization through periodic introduction of a new 
managerial viewpoint. Eliminates situations or operations which may 
have been carried down unnecessarily over a period of years. Prevents 
over-manning and "dry rot" in the organization. 

c) Stimulates the development of the individual because of the element of 
competition introduced. 

d) Eliminates the assumption by an individual of any "vested right" in a 
particular job. Explodes a man out of a job, "inherited" through favor 
which may or may not have been justified. 

e) Tests the individuals. The executive ability and versatility demonstrated 
in the progressive assignments provide an indication as to which men are 
most suitable as material from which Top Flight executives can ultimately 



TRAINING OF EXECUTIVES 279 

be drawn. Any lack of executive ability is also demonstrated and the 
"Merry-go-round" provides a means of placing an individual in a job 
for which he is best qualified. 
/) Will improve and should in most instances eliminate any situation where 
the efficiency of the organization is being impaired by lack of co-opera- 
tion between individuals. The periodic changing from one job to another 
and from one set of associations to another would tend to minimize fric- 
tion caused by personality clashes or personal feuds, and would tend to 
expose any chronic sources of such friction to suitable corrective ac- 
tion. 
g) Widens the trainee's circle of acquaintance among Company executives. 
In one year's assignment he will probably meet and work with some two 
hundred new acquaintances.' 1 

MULTIPLE MANAGEMENT 

An interesting development in the training of the group of execu- 
tives in between the supervisory and top level of an organization is that 
inaugurated in 1932 by McCormick & Company of Baltimore. Under 
this plan, known as "multiple management," three boards supplement 
the senior board of directors. These boards are the factory executive 
board, the salesboard, and the junior executive board. Interest here is in 
the latter of these. 

The theory of the plan is that by working on managerial problems 
in much the manner that a board of directors does, the executives on 
the junior board will gain useful education. To make the plan practical 
and realistic, the board works on such problems as those pertaining to 
bonuses, wages, working conditions, company plans and policies, etc., 
submitted to it by employees. In carrying on its discussions and in 
reaching its decisions, the board has access to all company records. The 
solutions and suggestions adopted by the board, if approved by the 
senior board or the president of the company, are made company rules 
and regulations. 

The organization of the junior board provides for rotation of mem- 
bers and stresses the advancement of promising executives. Membership 
on the thirteen-man board is by elections held every six months, at which 
time at least three of the current members must be replaced. Each 
member in turn sponsors an apprentice for two months. The thought 
here is to guide, encourage, and indoctrinate employees who have been 
hired within the preceding two years and who seem to possess executive 
ability. And the junior board members by their own work are aware 
that their activities may lead ultimately to selection for the senior board, 

8 D. S. Sargent, "Appraising Executive Performance," Supervision, November, 1945, 
pp. 6-7. 



280 PERSONNEL MANAGEMENT 

membership in which is dependent, for one thing, upon service on one 
of the boards mentioned earlier. 

This plan has much to commend it. Executives in the middle group 
are given the opportunity to tackle significant company problems, to 
discuss them freely and openly, to exhibit their judgment and original- 
ity, and to meet with senior officers on matters of significance to them. 
They can develop a sense of worth-while contribution to the solution of 
over-all problems of the company. Above all, to themselves personally, 
they know that opportunities for promotion are available and that their 
chances depend upon their own performances, open to the view of their 
colleagues as well as superior officers. 

CONFERENCE TRAINING 

Although not a particular type of training, conference training is so 
widely used in so many types of executive training that a description of 
it is warranted here. In conference training, the essential feature is the 
provision for guided discussion in a small group of conferees. To be 
most effective the plan calls for the following: 

1. A competent conference leader, who can carry out the principles of good 
conferences 

2. A preplanned outline of what the conference is to cover and how it is to 
be conducted 

3. A satisfactory and well-equipped conference room 

4. A limit to the number of conferees, preferably not over fifteen 

5. An interesting beginning, spirited and pointed discussions, and a good 
summarization 

MISCELLANEOUS TYPES OF COURSES 

A number of other types of training programs are also worth men- 
tioning. For example, growing in popularity in some fields is the short 
intensive school program. Executives are brought together for periods 
of a week to two weeks of training on well-defined topics. These short 
schools, or "workshops" as they are also known, are conducted by com- 
panies themselves or by various universities from time to time. They 
are usually restricted to qualified executives and professional staff. Their 
purpose is to provide refresher courses and training in new develop- 
ments and techniques. Work in counseling, testing, job analysis and 
evaluation, managerial principles, and various aspects of industrial rela- 
tions are examples of training received in such schools. In addition to 
the value of the courses themselves, the opportunity for discussion by 
small groups of executives with common interests and problems is an 



TRAINING OF EXECUTIVES 281 

advantage of this form of training. A possible shortcoming of such 
schools, which can be minimized by scheduling them during seasonal 
lulls, is that they take executives away from their desks for a relatively 
extended period of time. 

Many companies follow the practice of sending executives to conven- 
tions, association meetings of industries, educational institutes, and con- 
ferences which last at most up to three or four days. This is more of an 
educational than a training program, although some sessions of these 
meetings are very technical and practical in nature. Such training gives 
executives an opportunity to become acquainted with others in their 
industries, to gain suggestions about latest developments, and to learn 
of practices and sources of materials which can be followed up later by 
correspondence or personal visits. 

Correspondence courses are also underwritten by some companies. 
This practice is particularly advisable in companies in which the cost of 
developing individualized programs is prohibitive or personally con- 
ducted courses of good caliber are not available in the community. 
Careful investigation is desirable in order to be sure of the reliability 
of the school and quality of instructional material supplied. Executives 
and supervisors can then be assured of receiving instruction, direct 
guidance, and evaluation which would not otherwise be available. 

An unusual combination of operative and executive training is pro- 
vided by the "career man in industry" concept of building a strong 
organization. The principle behind this training is that carefully se- 
lected employees should be given training and opportunity for promo- 
tion. Then, as vacancies occur, well-prepared aspirants to positions will 
be available. In addition, the employees themselves will recognize the 
fact that opportunities are presented to worth-while candidates. The 
training program for new employees, using the sales field as an ex- 
ample, is made up of the following four parts: 

1. A week of orientation in which the general make-up, policies, and prac- 
tices are presented by various executives. The aim here is twofold: to 
draw an over-all picture of the company and to sell the company to the 
new employee. 

2. An eight-month training in the essentials of salesmanship. This is a com- 
bination course of classroom work, study of various departments, and 
practice selling. 

3. Sales work in the field, under strict supervision, is then provided. This 
consists of a month of retail selling, then an intensive review period at the 
home office, and finally a month in a field office doing sales promotion 
work. 



282 PERSONNEL MANAGEMENT 

4. Every two years, a week of "postgraduate" training is provided. This pro- 
vides an opportunity for refresher work, learning of new products and 
merchandising methods firsthand, and strengthening personal contacts 
with the company. 



CONTENT OF TRAINING 

The foregoing has covered the most important types of executive 
training programs and has also noted various techniques and tools used 
in connection therewith. It is now pertinent to examine the subject 
matter which is covered in such courses. This might seem a relatively 
easy aspect, but actually it is most difficult for the simple reason that 
so little is known about what makes for successful leadership. And this 
is, of course, the essence of management. Some executive training pro- 
grams seek to improve and develop leadership capacities and some sat- 
isfy themselves with the various problems that a manager, executive, 
or supervisor is likely to encounter. Attention is given first to the latter 
type of content, and then leadership qualities are examined. 

Perhaps the obvious and simplest approach to the matter of content 
is to take up tasks which the executive is most likely to encounter. Of 
interest is the fact that most executive training programs, from this 
angle, take up various subjects connected with handling people — the 
so-called "human relations" problem. Such subjects as the following are 
discussed: 

1. Present-day labor-management philosophy and policies 

2. Working with others through organizational channels 

3. Communicating up and down organizational channels 

4. Employment policies and practices 

5. Training and education policies and practices 

6. Discipline, grievances, and rules and regulations 

7. Employee services and recreation 

8. Transfers, promotion, merit, and seniority policies 

9. The union contract; its meaning and implications 
10. Community agencies and institutions 

On the other hand, a more basic approach is to try to develop con- 
tent, which has reference to the basic characteristics that a leader should 
possess, irrespective of the specific tasks performed. Unfortunately, there 
is as yet no agreement as to what these characteristics are. Fortunately, 
however, much study is being devoted to this problem, and it is likely 
that agreement among students will consequently develop. To illustrate 
the characteristics that have been included in executive training pro- 
grams, the following list is of interest: 



TRAINING OF EXECUTIVES 



283 



1. Ability to think 

2. Ability to organize 

3. Ability to handle people 

4. Ability to plan 

5. Ability to lead 

6. Ability to get and interpret 
facts 

7. Loyalty 

8. Decisiveness 

9. Teaching ability 

10. Ability to solve problems 

11. Courage 

12. Self -motivation 



13. Desire for achievement and pres- 
tige 

14. Social balance and understanding 

15. Sense of responsibility 

16. Emotional balance and poise 

17. Ability to influence people, indi- 
vidually and in groups 

18. Attitudes toward subordinates and 
associates 

19. Attitude toward community asso- 
ciations 

20. Attitude toward economic and po- 
litical systems 



This list is by no means complete, but it does illustrate the wide range 
of subjects that have been considered basic leadership traits. 

An interesting illustration of the characteristics desirable in leaders 
may be found in Figure 59. This depicts the fundamental responsibili- 



FIGURE 59. Executive Characteristics* 



Name of Executive. 



iMuud&n^ 



Responsibility 

1. Inspection 

2. Investigation and Research 

3. Planning 

4. Preparing Procedures 

5. Co-ordination 

6. Evaluation 

7. Interpretation of Plans and 
Procedures 

8. Supervision of Technical Operations 

9. Personnel Activities 

10. Public Relations 

11. Professional Consultation 

12. Negotiations 

13. Scheduling, Routing, and 
Dispatching 

14. Technical and Professional Operations 



WORK PATTERNS PROFILE 

Per Cent of Time 



10 



20 



30 



40 



* Source: C L. Shartle, "Leadership and Executive Performance," Personnel, March, 1949, p. 371. 



284 



PERSONNEL MANAGEMENT 



ties of executives and, in the case cited, the approximate percentage of 
time spent in performing the duties. Certainly, if the content of a job 
can be so determined, the next step of appropriate training is more easily 
taken. 

Since there is so much variation in executive training content, the 
best practice for any company in establishing its own program is to give 
consideration to outside practices but to build its program in terms of 
its own needs. This can be done by taking the following steps: 

1. Determine as precisely as possible the major objectives or tasks that the 
company faces 

2. Inventory present executive capacities 

3. Compute the shortages of executive capacities as compared to major needs 

4. Establish content of training required by individual executives to bring 
them up to desired standards 

By tailoring content to suit individual needs, it is possible to arrive at a 
program which will invariably prove valuable. Moreover, such an ap- 
proach usually achieves better executive co-operation in the training 
program because the executives themselves must help in developing the 
program. And where participation is involved, there is a greater desire 
to make the program work. In the final analysis, this in itself helps to 
develop a better leader because an executive who seeks to improve him- 
self possesses a sound feeling of service to others — a desirable quality of 
true leadership. 



FOLLOW-UP AND EVALUATION 

Follow-up and evaluation of executive training programs are par- 
ticularly difficult because it is almost impossible to determine which re- 
sults of executive efforts are attributable to training and which to other 
causes. Nevertheless, it is desirable to make an attempt in this direction 
because a partial answer is better than none. Examples are available of 
measurements which have been made of training results. In the case of 
TWI, a study of 600 plants gave the results shown in Table 15. 

TABLE 15 
Training Results 





Percentage of Plants Reporting Results 




Under 25% 


25-49% 


50-74% 


75% and Over 


Production increased 

Training time reduced 

Manpower saved 


63 

52 
89 
89 


16 

25 

9 

5 


1 
7 
1 
5 


20 

16 

1 


Scrap loss reduced 


1 







TRAINING OF EXECUTIVES 285 

FIGURE 60* 



TWI OUTSTANDING "RESULT OF THE WEEK" IN DALLAS DISTRICT 

Result was noted and reported to us on (Date) May 3, 1945 





Result of: J.I. x J.M. 


x J.R. 


x P.D. 


1. 


Kind of establishment (name of product or service) 


Shipbuilding 


2. 


Name and location of plant "X 


' Company 






May we use company name? 


Yes x 


No 


3. 


Number of employees in plant 


1 8,749 




4. 


Number of employees affected 


15,000 





5. Just what happened in "before and after" terms: 

(State evidence in facts, figures, man hours, etc.) 



During the past 4 years four different types of vessels have been built. When 
the yard opened only 2% of the workers had previous shipbuilding experi- 
ence. About 50% had no previous experience in any related industry. 
The average employment during this 4 years has been 18,000. The number 
of certificates issued in the three TWI "J" programs are: 

J.I 2850 

J.M 800 

J.R 540 

Mr. Newell Hogan, Training Director, and Mr. James D. McClellan, Produc- 
tion Manager, reported the following beneficial results from TWI programs: 

Increase in production 45% 

Reduction in training time 78% 

Reduction in scrap 69% 

Reduction in tool breakage 75% 

Saving of manpower 45% 

Reduction of accidents 70% 

These results were arrived at by comparison of production department records, 
based on the construction of the first 50 destroyer escorts as compared with 
the last 50. The credit for these beneficial results is largely attributed to the 
successful continuous use of TWI programs. 

All levels of supervision in both the yard and the office have been processed 
in one or more of the "J" programs. This accounts for the large number of 
employees affected. 



Source: The Training within Industry Report (Washington, D.C.: War Manpower Commission, 1945), p. 94. 



286 PERSONNEL MANAGEMENT 

Interesting results in individual plants are shown in the reports illus- 
trated in Figures 60 and 61. 

FIGURE 61* 



TWI OUTSTANDING "RESULT OF THE WEEK" IN DENVER DISTRICT 

Result was noted and reported to us on (Date) Apr/7 76, 1945 



Result of: J.I. x J.M. x J.R. x P.D. 


1. 


Kind of establishment (name of product or service) Rubber products 


2. 


Name and location of plant "X" Company 


May we use company name? Yes x No 


3. 


Number of employees in plant 5,000 


4. 


Number of employees affected 40 



5. Just what happened in "before and after" terms: 

(State evidence in facts, figures, man hours, etc.) 

Before "J" Programs: 

In one clerical department, where 46 were employed, 375,000 
units were produced in one year. 

After "J" Programs: 

By applying the three "J" methods conscientiously and continu- 
ously, 450,000 units were produced by 40 workers. 
This is an increase of 20%, or 75,000 units, in output by a work 
force reduced by 13%, or 6 workers. 

The quality of the work was also greatly improved. 

Note: Most credit is given to J.I. and J.R., as the work force has 
always been method-improvement minded. 



* Source: The Training within Industry Report (Washington, D.C.: War Manpower Commission, 1945), p. 93. 

An interesting summary of the results that should flow from a good 
executive training program is contained in the following listing (cer- 
tainly it is a broad gauge test of this subject, as well it should be) : 

1. Increased executive management skills 

2. Development in each executive of a broad background and appreciation 
of the company's over-all operations and objectives 

3. Greater delegation of authority because executives down the line are 
better qualified and better able to assume increased responsibilities 

4. Creation of a reserve of qualified personnel to replace present incum- 
bents and to staff new positions 

5. Improved selection for promotion 

6. Minimum delay in staffing new positions and minimum disruption of 
operations during replacements of incumbents 



TRAINING OF EXECUTIVES 287 

7. Provision for the best combination of youth, vigor, and experience in 
top management and increased span of productive life in high-level 
positions 

8. Improved executive morale 

9. Attraction to the company of ambitious men who wish to move ahead 
as rapidly as their abilities permit 

10. Increased effectiveness and reduced costs, resulting in greater assurance 
of continued profitability 4 

EVALUATION OF TRAINEES 

Another approach to evaluation is that of determining how well 
executive trainees have learned. On the one hand, they may be tested 
and rated after their courses of training. Thus, in some of the plans 
mentioned in the foregoing, supervisors, and higher executives as well, 
are rated as to their promise for further training. In addition, regular 
examinations are scheduled to ascertain how well various phases of 
technical and descriptive materials have been absorbed. Such tests 
should be given with care in order to avoid the development of a feeling 
on the part of trainees that a "school" is being operated; most execu- 
tives like to feel that the "little red school house" is a part of their past. 

More informal plans of follow-up include conferences and discus- 
sions by superiors with those who have taken training work. In this 
way, the supervisors can obtain some measure of the value of the train- 
ing received, and the trainees can prepare themselves more carefully, 
knowing that such talks are to take place. An added value of such in- 
formal talks is that they bring various levels of leadership together more 
frequently, giving each the opportunity to get better acquainted with 
the other. 

An inversion of follow-up which has desirable points is that in which 
trainees are asked to express themselves on the quality or results of 
training. In one company, for example, executives are asked to sign and 
comment upon the quality and usefulness of each conference they at- 
tend. This acts as a double-edged weapon: first, the conference leader 
and training school are alert to build and conduct better sessions; and, 
second, the conferees must be more attentive in order to be able to ex- 
press pertinent interpretations and criticisms. In another company, ex- 
ecutives who take various forms of training are required to fill out 
weekly reports indicating progress in various aspects of their work. All 
that is required is a simple check ( without quantitative estimates ) oppo- 
site any of the following items: reduction of indirect labor, indirect 

4 E. W. Reilley and B. J. Nuller-Thym, "Executive Development," Personnel, May, 
1948, p. 412. 



288 PERSONNEL MANAGEMENT 

cost, daywork operations, materials or supplies; and increase or im- 
provement in processes, quality, personnel relations, or suggestions. 
Here again knowledge that the training is expected to produce results 
will keep the trainees alert to see how training material can be applied 
in various phases of their work. 

QUESTIONS AND PROBLEMS 

1. Why is the training and experience that one receives while working as an 
operator of relatively little value when one becomes a supervisor? 

2. If previous experience is usually valueless, how do most people who are 
appointed to supervisory positions get by on their new jobs? 

3. If you were asked to prepare a supervisory training program, what use 
would you make of job analysis in this connection? 

4. Indicate what differences in training programs might be found in the case 
of lower levels of executives, middle groups, top executives, and staff 
executives. 

5. Assume conditions of role playing with another student and pretend to 
handle an employee who has a habit of coming in late. What difficulties 
do you encounter in this practice session, and what must be done to over- 
come them? 

6. Assume conditions of role playing, and pretend that a supervisor is being 
told by the general manager that his departmental expenditures are 10 per 
cent over budgeted figures. What lessons do you learn from this practice? 
Can executives use role playing to learn how to handle situations that con- 
cern only them? Explain. 

7. Do you think that role playing will ever be widely used? Why or why not? 

8. If you were to compile a list of abilities that an executive should possess, 
would you not come out with one that would set up an impossible task of 
training? Explain. 

9. If supervisory and executive training is so valuable during war years, why 
is it not also valuable during peacetimes? Explain. 

10. Assume that, in a company following the understudy plan of executive 
development, you, contrary to your expectations, are not made the under- 
study of a particular executive. Would you consider the door of opportunity 
closed in your face? Would this not tend to lower your morale and your 
desire to work hard? 

11. Explain the general principles of the TWI plan of supervisory develop- 
ment. What are its strong and weak points? 

12. Under what conditions is the statement true that: "If the worker hasn't 
learned, the instructor hasn't taught"? 

13. In the job relations training program, "get the facts" is one of the essential 
steps. Assume that an employee asks you about the profits of the company 
and, upon asking your superiors, they inform you that such information is 
not being made available to the lower levels of the organization. What 



TRAINING OF EXECUTIVES 289 

happens then if you have based your hopes in handling grievances on the 
job relations training program? 

14. How can you be sure that as an executive you have all the facts necessary to 
handle a job relations problem? 

15. A number of organizations have used the job rotation plan of executive 
development to good effect. Why would this plan have good results? What 
are its shortcomings? 

16. It has been said that the groups of executives between the top and bottom 
levels of the organization are usually the poorest trained. How may this be 
accounted for? 

17. Some have contended that conferences serve merely to waste time, avoid 
decisions, and increase organization politics. How may these pitfalls be 
avoided? 

18. Some companies follow the plan of encouraging their executives to attend 
conventions in order to broaden their views. How can the effectiveness of 
such plans be increased? 

19. Write a report on the merits of visual education methods in executive 
training. 

20. By what methods may executive training methods be evaluated? What are 
the major difficulties in making such measurements? 



CHAPTER 



15 



Basic Aspects of Education 



SCOPE OF EDUCATION 

As noted earlier, "education" is used here to refer to the general increase 
in ability to adjust to one's environment. Business wise this contrasts 
with learning how to perform specific tasks, which is the province of 
training. While a person may be skilled in doing (trained to do) a 
particular job, his performance may nonetheless be mediocre because 
his understanding of (education in regard to) it is of a low order. The 
lack of ( or mis- ) understanding may be in regard to the particular job 
itself, to the policies regarding the job, to the desires of superiors, or to 
the actions of subordinates (if any) . 

Poor adjustment may be found as often among executives as among 
employees. When executives fail to understand and provide for the 
social, economic, and political aspects of business, they will lead their 
company to unsatisfactory results. When they fail to understand their 
subordinates and employees, they bring about or accentuate labor-man- 
agement disputes. On the other hand, when employees fail to adjust — 
through their own fault or that of others — they become parties to un- 
necessary grievances, create disturbing labor problems, lead frustrating 
lives, and are poor producers. 

The ultimate goals of education are to increase productivity, to safe- 
guard the success of the company, and to increase the personal satisfac- 
tions of the individuals themselves. These goals are sought through edu- 
cation's effect upon understanding, perspective, and attitude. Labor, for 
example, works more effectively when it understands what manage- 
ment is doing, when it feels management's objectives are significant, and 
when it agrees that management's methods are justifiable. And execu- 
tives, in turn, can lead a more effective team when they understand the 
motives, needs, and thinking of labor. Through such understanding 
comes, first, appreciation for one another's interests and problems; sec- 
ond, adjustments in their thinking and action; and, third, fair com- 
promises in their plans and actions. 

290 



BASIC ASPECTS OF EDUCATION 291 

This discussion of education, therefore, is as much concerned with 
the education of executives as with workers. In actual practice the educa- 
tion of both is so intertwined that it is difficult, if not impossible, to 
separate the two even for purposes of discussion. It is felt, however, that 
if management is to educate labor effectively, it must first know what 
labor knows or needs to know. Hence this chapter is devoted to princi- 
ples and practices of developing an upward flow of information by 
which management may learn about the thinking of lower levels of the 
organization. In the next chapter, attention will be directed to down- 
ward and horizontal flows of information. Thus is established the two- 
way flow of communications which is the blood stream of an educa- 
tional program for management and for employees. 

In regard to the upward phases of educational communications, the 
following aspects are discussed in this chapter: 

1. Basic considerations in employee education 

2. Nature and role of employee morale 

3. Knowledge of employees 

4. Measuring attitudes and understanding 

5. Encouraging employee expressions 

BASIC CONSIDERATIONS IN EMPLOYEE EDUCATION 

NEED OF A PROGRAM 

Broadly speaking, any worker's effectiveness, in terms of himself, 
depends upon his "know-how" and "know-why." It is with the latter 
that we are now concerned. "Know-why" has a number of facets. It 
underlies the understanding that a given employee has to such questions 
as these: 

1. Why is this job important? 

2. How does this job tie in with the work of fellow employees? 

3. What is there in this job for me? 

4. What is the company getting out of it? 

5. Is there a fair division between us? 

6. Will I benefit in the long run from "putting out" on it? 

7. Does my boss really appreciate how I'm doing here? 

8. Why are they always talking about competitive conditions? 

9. Why is my job less important than Bill's? 

All these questions have an impact upon motivation. Answers to 
them will determine the degree of exertion which an employee puts 
forth. His co-operation with superiors; his loyalty to the company; his 
willingness to work really hard; and his use of company properties all 
are closely affected by his answers. And these questions are being an- 



292 PERSONNEL MANAGEMENT 

swered every minute of every day, whether or not a company has an 
educational program. From newspapers, radio, and television; from the 
informal actions of supervisors; from the communications of unions; 
from governmental channels; and from his fellow workers, he is getting 
information, ideas, and impressions. Unless management formally par- 
ticipates in the educational program too, its views will not be com- 
municated correctly or completely. So the first point that needs to be 
made on education is that management must take a forceful, construc- 
tive role in such a program. 

FACTORS OF EDUCATION 

A little thought about the questions asked in the foregoing section 
will disclose two broad aspects of any employee's education: 

1. What he really knows, or doesn't know 

2. What he feels or senses 

Of course, the two are related — our thinking is affected by our emo- 
tions and vice versa. Were employees guided solely by logical, mental,, 
and rational processes, the educational process would be somewhat sim- 
plified. The impact of emotional and nonrational factors on the deci- 
sions of all of us (management as well as labor) cannot be denied. 
Hence the lesson for management is obvious, both emotions and logic 
must be affected by an educational program. 

DYNAMIC ASPECTS OF EDUCATION 

It must also be recognized that education is a continuing, repetitive, 
and dynamic process. At a particular moment, employees may be con- 
vinced of the fairness of management. But new employees are hired 
and the old forget, so the lessons must be repeated. Or new processes 
or such changes as automation arouse fears in employees; so education 
is called for to reassure them. And as employees acquire new ideas, 
management must be alert to learn about them, transmit new informa- 
tion to employees, note the reactions of employees to the educational 
efforts, and proceed to repeat or add to the educational process, as the 
case may be. Whether we like it or not, the need of a permanent pro- 
gram must be accepted as an important fact about education. 

MEASURING EDUCATIONAL NEEDS 

Among these introductory remarks, one more should be made — 
that resources of education will be utilized most effectively when educa- 
tional needs are measured. To minimize waste, it is essential to deter- 
mine how much employees know and what their attitudes are. From this 



BASIC ASPECTS OF EDUCATION 293 

base, the program can be designed more intelligently regarding how 
much education is to be aimed for in succeeding periods. At the end of 
each period, measurements can again be taken to ascertain how much 
progress has been made. Thus the effectiveness of the program will be 
evaluated; and also the basis for the next phase of the program will be 
laid. 

In using the term "measurement," it is recognized that absolute yard- 
sticks of educational matters are not available. Nevertheless, there are 
arbitrary, relative, and useful measures of what employees know, their 
opinions and attitudes. These will be noted later in this chapter. The 
absence of perfect measuring sticks is no reason to discard others from 
which partial, yet practical, estimates of progress and programs may be 
derived. 

MORALE 
SCOPE 

With the foregoing suggestions about education in mind, it is now 
pertinent to note the relation of education to employee productivity. 
Worker productivity or effectiveness depends upon technological re- 
sources, managerial skill, employee skills and aptitudes, and employee 
willingness to co-operate. And such willingness more and more seems to 
be a major factor in labor-management relations. It seems to be de- 
termined in any given case by, first, the understanding which an em- 
ployee has of company practices and, second, his attitude toward his 
company and its management. Education's task is to improve such 
understanding and attitudes. Before this task can be undertaken ef- 
fectively, management must have a clear picture of existing understand- 
ing and attitudes. Hence the subject of understanding is discussed in the 
next section, and attitudes in the present section. 

Attitudes toward a company or its management essentially find ex- 
pression in terms of a spirit of zeal, confidence, and loyalty — or lack 
thereof. This intangible attitude, this "esprit de corps," this mental set, 
is generally known as "morale." It is so influential in its impact that it 
is well to devote attention now to ( 1 ) the theory of its development, 
(2) important considerations in its development, and (3) steps or 
stages of development. 

THEORY OF MORALE DEVELOPMENT 

Since morale is a mental attitude, it must have its source in some 
causal factors. Close inspection of situations in which good morale ex- 
ists reveals an understanding on the part of employees (and executives, 



294 PERSONNEL MANAGEMENT 

too) that high output, low costs, good profits, and, of course, superior 
service to the customer are indispensable to high wages, good working 
conditions, and superior opportunities for personal advancement. 

Because of such understanding, they are willing to subordinate them- 
selves to the good of the company. And, not unlike the Biblical injunc- 
tion that to gain life one must lose it, the act of subordination results 
eventually in personal enhancements. In short, employees who advance 
the interests of the company thereby advance their own. In such in- 
stances, the interests of company and employee have been satisfactorily 
integrated to the benefit of each, and with a resulting effective mental 
attitude or morale. 

Such a process of integration of interests will have desirable morale 
effects. Employees will follow orders willingly, adhere faithfully to 
company rules, carry on in spite of difficulties, co-operate voluntarily, 
and exhibit pride in their company and its products. They are willing, 
and with initiative and personal pride, to follow their leaders to achieve 
established objectives. They are, on the other hand, ready to repel at- 
tacks on the reputation of their working environment. 

These favorable aspects of morale do not arise spontaneously. Man- 
agement must recognize the various relationships and cultivate the 
forces that yield the desired effects. In cases in which management has 
failed to promote morale or actually prevented the process, the results 
have eventually been most unsatisfactory. Those who avariciously have 
lined their own pockets at the expense of labor have brought forth in- 
creased labor trouble, burdensome legislation, and the opposition of 
the general public. And those who ignored the need of instructing em- 
ployees in an appreciation of the important relation of company ob- 
jectives in the attainment of personal objectives have also helped to 
bring forth undesirable results. After all, employees ignorant of the 
process of integration of interests can obstruct the development of good 
relations just as much as those aggrieved by injustices. 

To summarize, morale is an attitude of mind. It is developed out of 
the process of integrating interests. And its effects are combined in a 
total willingness to apply skills and aptitudes with efficiency and econ- 
omy. It is, therefore, indispensable to the attainment of the goals that 
the company deems worth while. 

IMPORTANT CONSIDERATIONS IN MORALE DEVELOPMENT 

Of significance in morale development are, first, the responsibilities 
of management; second, factors of development; and, third, need of con- 
tinuous vigilance. 



BASIC ASPECTS OF EDUCATION 295 

1. Management's Responsibilities. Perhaps the foremost re- 
quirement for morale development and maintenance is the realization 
that these are high responsibilities of management. It would indeed be 
fine were labor to come to work with good morale and to assume re- 
sponsibility for its maintenance. Unfortunately, this is not true. Hence, 
if management is to protect and enhance its desired prerogatives of 
leadership, it will do well to take the time and effort to improve the 
morale of its supposed followers. If and when management does not, 
neither it nor anyone else should be surprised when the allegiance of 
employees attaches to outside groups rather than internal management. 
And even though management may take the financial risks of operating 
a business, that in itself does not convince labor that its loyalty should 
be on management's side. 

2. Factors of Morale. Another significant requirement is the 
recognition that the number of factors which may cause morale to be 
raised or lowered is infinite. Every factor in a business — its objectives, 
ideals, leadership, functions, faculties, environmental aspects, organiza- 
tion structure, procedures, and controls — and how it is planned, or- 
ganized, and controlled, affects the morale of employees. For that rea- 
son, every executive in the organization should be made conscious of the 
possible effect that any of his acts may have upon the morale of em- 
ployees. 

This is an excellent reason why someone with a knowledge of per- 
sonnel relationships and effects should be high in the administrative 
councils to interpret all matters that may be discussed from a personnel 
viewpoint. If it is significant to have sales, production, and financial 
representation upon executive committees, present-day conditions in 
labor relations are such that the representation of the specialist in per- 
sonnel management is no less important. Indeed, one may find that one 
reason why personnel departments have not succeeded in developing 
better labor relations is that, until very recently, few companies have 
assigned them a sufficiently high place in the organization. As a conse- 
quence, their efforts are stifled at the point at which it is imperative that 
they gain backing and recognition — the top administrative level. 

3. Maintaining Morale. It must also be recognized that even 
though morale is slow to develop and difficult to maintain, it can be 
lost overnight. It seems to be a human trait to remember the bad and 
to forget the good, to believe the rumors and to shy away from logic 
and facts, and to pursue heroes one day and to cast stones upon them 
the next. The occasions on which such things have happened in labor 
relations should have been sufficiently frequent to show business leaders 



296 PERSONNEL MANAGEMENT 

the fragile threads that tie employee and employer together. Illogical 
though it may be, it is at once pathetic and humorous to see employees 
criticize employers for bad practices of years ago as reason for not trust- 
ing them in the present. For example, not long ago during an arbitra- 
tion hearing, a representative of labor claimed that piece-rate data could 
not be trusted because the company had cut some rates in 1932. Al- 
though the company representative contended and the labor represen- 
tative agreed that no cuts had been made since that time, labor was still 
skeptical. Such evidences are striking in the lesson they teach: Eternal 
vigilance is the price of good morale. 

STEPS IN DEVELOPING MORALE 

In broad outline a program to develop morale would consist of the 
following: 

1. Divide and locate responsibilities for morale upon — 

a) Line and staff executives 

b) Administrative and operative executives 

2. Determine the relationships that exist between — 

a) Company objectives and personal objectives 

b ) The factors which cause good morale and the results which flow from 
it 

3. Determine the extent to which good morale exists in terms of — 

a) Effectiveness of the organization in attaining its objectives 

b) The attitudes of employees toward various phases of the company 

4. Develop and install plans for — 

a) Counteracting the forces leading to poor morale 

b) Strengthening the forces leading to good morale 

5. Follow up and evaluate morale-building programs — 

a) By periodic audits of specific programs 

b) By periodic audits of all personnel activities 

This outline is not expanded here because in essence it is the outline 
of the entire text. The factor of morale has been important in every- 
thing that has been said thus far and, if possible, will be of increasing 
significance in the topics to be discussed soon. A momentary pause to 
summarize the concepts of morale building has been deemed advisable, 
because of their relation to an understanding of the important factor of 
employee attitudes. 

KNOWLEDGE OF EMPLOYEES 

SCOPE OF SUBJECT MATTER 

The willingness of employees to co-operate is also affected by the 
knowledge they possess about various company practices and policies. 



BASIC ASPECTS OF EDUCATION 297 

Anything or anybody connected with or related to the company may 
come into an employee's sphere of fact or opinion. Hence there are no 
subjects which can be said to be "none of his business." Since they affect 
his thinking — and thus his willingness to co-operate — an employee's 
reactions to anything or anybody must be made company business. At 
least this is true in terms of determining what may be included as 
subject matter in an educational program. 

When it is said that nothing is outside the realm of education, there 
is danger that something important may be left out. Hence it is desirable 
at least to list the major categories with which an educational program is 
to deal. These may include such headings as the following: 

1. Objectives 

a) Of the company in relation to customers, profits, stockholders, em- 
ployees, and the community 

b) Of a nonfinancial as well as a financial nature for employees and 
management at all levels 

c) Of a short-run and a long-run nature 

2. Policies 

a) In relation to production, sales, financing, prices, and wages 

b) In relation to personnel matters, such as selection, training, wages, 
and promotions 

c) In relation to handling grievances and disciplinary action 

3. Organizational relationships 

a) Of management levels down through to the ranks 

b) Employee channels of communication upward 

c) Relationships to staff departments 

d) Authority and responsibility limits 

4. Extracompany relationships 

a) Role of the economic system 

b) Role of the political system 

c) Social and community factors 

d) Problems of national welfare and security 

INCLUSIVENESS OF PROGRAMS 

More specific examples of the foregoing will be cited in later dis- 
cussions. The breadth and variety of topics of interest to the employee 
are apparent. But is the company to educate all employees in all of 
these? Won't it spend all of its time in education? The job is big, but 
the stakes are great. Either management spends time on them, or it will 
lose in the battle of reaching the minds of its employees. Not all subjects 
need be discussed at one time — the load may be staggered as to subjects 
and as to different groups of workers. But over the long pull such a 
coverage must be a part of everyday business practice. 

Education need not be conducted on some high plane and in distinc- 



298 PERSONNEL MANAGEMENT 

tive quarters. Indeed, in the industrial world, education may be effec- 
tively carried on in conjunction with training or day-to-day supervisor- 
employee relations. For example, no more striking lesson in capitalism 
and the free-enterprise system can be given than the explanation that 
could accompany a supervisor's discussion with an employee concerning 
some parts or materials which the latter, let us say, has spoiled. Or in 
taking up a request for a raise, the supervisor has an excellent oppor- 
tunity to relate the case to how our profit system operates. Or in writing 
up an accident report, the employee is in a favorable mood to appreciate 
the social implications of his actions, and how the company is doing its 
utmost to accept its social responsibilities. Education can be built into 
day-to-day industrial relations and not established as a frill or process 
apart from current realities. 

MEASURING ATTITUDES AND UNDERSTANDING 

Having seen the importance of attitudes and knowledge of em- 
ployees, it is now appropriate to see what can be done about their 
measurement. This task is discussed under the following headings: 

1. Need of measurement 

2. Information sought 

3. Methods of gathering information 

4. Reporting findings 

5. Rules of measuring attitudes 

NEED OF MEASUREMENT 

Most executives, to a greater or lesser degree, like to think that they 
are good judges of what is on the minds of their subordinates. If they 
were as good as they think they are, the task of measuring employee 
attitudes would require little more than passing attention here. But the 
evidence is to the contrary; the minds of employees are far from an open 
book to most executives, although much can be learned if the organi- 
zation is taught how to "stop and read." 

How far wrong management can be in its interpretations of what 
workers think may be deduced from a survey in which foremen and 
employees were asked to rank various morale factors. The results are 
summarized in Table 16. Here we see that the employers' emphasis 
upon fair pay, job security, interesting work, and promotion, to mention 
but a few factors, is not shared in equal degree by the employees. The 
latter, surprisingly enough, placed promotion, working conditions, and 
job security at the bottom of the list. When management's sights are 
so far off the mark, something should be done to correct its aim. 



BASIC ASPECTS OF EDUCATION 299 

The answer seems to favor some form of formal measurement of 
employee attitudes. This should not be taken as a peremptory dismis- 
sal of more informal interpretations, such as those which supervisors 
should be making constantly in their daily associations with employees. 
On the contrary, the supervisor-subordinate contact should be developed 
into the most commonly used method of measuring attitudes. It is con- 
tended here, however, that a study of the techniques and principles of 
formal methods is useful not only to those who wish to make quanti- 
tative measurements but also to those who wish to improve their under- 
standing of employee attitudes. 

TABLE 16 
Rank Assigned Various Factors by Foremen and Employees* 

Ranked by Ranked by 

Job Goal Workers Foremen 

Full appreciation of work done 1st 8th 

Feeling "in" on things 2d 10th 

Sympathetic help on personal problems 3d 9th 

Job security 4th 2d 

Good wages 5th 1st 

"Work that keeps you interested" 6th 5th 

Promotion and growth in company 7th 3d 

Personal loyalty to workers 8th 6th 

Good working conditions 9th 4th 

Tactful disciplining 10th 7th 

* From Foreman Facts (Newark, N.J.: Labor Relations Institute), Vol. IX, No. 21; 
reproduced in Management Review, June, 1954, p. 362. 

INFORMATION SOUGHT 

In general, attitude surveys cover all kinds and types of topics for 
the single reason that action on the part of an employee may be caused 
by thoughts extraneous to the business as well as those arising out of 
company practices. A simple outline of classes of information follows: 

1. Information about the individual 

a) Relating to his position in the company 

b ) Relating to personal matters 

2. Information about the company 

a) Degree of participation in various types of company activities 

b) Degree of understanding of company policies and practices 

c) Likes and dislikes 

d) Feelings of fairness and unfairness 

3. Information about extracompany matters 

a) Relating to the community 

b) Relating to economic and political affairs 

1. The Individual. The purposes of the first category of informa- 
tion are to allow for individual differences in appraising answers in the 



300 PERSONNEL MANAGEMENT 

other categories and to interpret the nature of the individual himself. 
For example, when interpreting the answers on whether or not em- 
ployees like their supervisors, it is desirable to be able to classify the 
answers according to such factors about the individuals as the depart- 
ments in which they work, their age, how long it has been since their 
last promotion, and the amount of earnings. Again, when such indi- 
vidual characteristics as health, home conditions, affiliations, and tem- 
perament are known, it is possible to appraise more intelligently the 
answers to questions pertaining to the company for which he works. 
2. The Company. The second category of questions is, of course, 
the heart of such a survey. Here is sought information about what the 
employee thinks of his company. Using the outline suggested above, 
unless employees, in the first place, understand company policies and 
practices, there can be little hope of gaining their confidence, of build- 
ing morale, and of building an effective working force. To get infor- 
mation on this subject, such questions as the following have been asked: 

1. Do you understand how the bonus system works? 

2. Did you find the last copy of the Annual Report to Employees interesting 
and easily understandable? 

3. Do you have any questions about the Employee Handbook? 

4. Are»you getting the kind of company information you want? 

5. Have your training courses been useful to you? 

6. Has your supervisor explained company policies to your satisfaction? 

Questions about the degree of participation in various company ac- 
tivities and programs have three purposes: first, to determine how ex- 
tensively employees use various facilities; second, to gain an indirect 
measure of whether or not they like them; and, third, to detect which 
programs presumably need changes and improvements. Following are 
examples of questions in this category: 

1. Do you take part in company-sponsored athletic or social programs? 

2. Do you like the type of music played on the public address system? 

3. What features do you like in the company newspaper? (A list of the 
features is then given. ) 

4. How often, on the average, do you eat in the cafeteria during the week? 

5. Do you read the bulletin boards as a regular practice? 

Though the likes and dislikes of employees and their opinions of 
fairness and unfairness may be illogical, irrational, and emotional, nev- 
ertheless these, more than anything else perhaps, are the key to the 
morale of employees. Consequently, it is essential to determine as ac- 
curately as possible the opinions of employees along these lines if proper 
corrective action is to be taken toward factors producing undesirable 



BASIC ASPECTS OF EDUCATION 301 

attitudes. Following are examples of questions that seek information in 
these categories: 

1. Do you think the principle of our incentive pay plan is fair? 

2. Do you find that your fellow workers are friendly? 

3. Do you think that promotions are based upon pull? 

4. If you had your choice of working hours, which would you choose? 

5. Do you hope to stay with the company permanently? 

The foregoing description of types of information is not intended to 
be exhaustive or critical. How much detail should be sought must be 
a matter of individual cases, and how and in what form questions should 
be asked are matters that will be dealt with more fully in considering 
methods and principles of making surveys. 

3. Extracompany Matters. The purposes of the third category 
are to ascertain how the company compares with standards in the com- 
munity and to determine what trends are developing in the community 
or nation which may have intracompany effects. Information along 
these lines has been sought by individual companies and by various out- 
side groups such as trade magazines. Examples of questions that have 
been asked are as follows: 

1. What do you consider to be a fair rate of return on invested capital? 

2. Do you feel that unions should be subject to governmental control? 

3. Do you believe that unions have helped the rank and file of workers? 

4. Is management doing all it can for employees? 

5. Are you in favor of strike legislation? 

6. Should the Taft-Hartley Act be amended? 

METHODS OF GATHERING INFORMATION 

A number of methods have been employed to learn what employees 
are thinking. All are as yet in more or less experimental stages. At 
least, students in this field have up to the present not tended to favor 
any one. Hence all that can be done here is to describe the more com- 
mon methods and indicate their strong and weak points. Measurements 
may be based upon the following: 

1. Direct observation of results and behavior 

2. Employee-initiated methods 

3. Employer-directed methods 



1. Direct Observation. Direct observation of results and be- 
havior is the most common method of ascertaining employee opinions 
and attitudes. It may consist of a simple observation by a foreman of the 



302 PERSONNEL MANAGEMENT 

daily output records or of how his workers appear to be acting, e.g., 
more or less friendly than on previous days. Or it may consist of detailed 
statistical analyses of trends, indexes, and correlations of data on such 
results as absenteeism, grievances, disciplinary action, turnover, in- 
centive earnings, man-hours per unit of output, output, quality, strikes, 
and accidents. Or, again, carefully prepared reports may be compiled 
to show such things as how employees are behaving, labor unions are 
growing, legislation is developing, and social conditions are changing. 

The theory of this method is that of working from effect back to 
cause. If one keeps a close eye on results and particularly on changes 
in trends, it should be possible to follow the trail back and reach con- 
clusions as to how employees are thinking. Certainly, in the event of 
such disturbances as strikes or slowdowns, the conclusions are obvious 
that employees are dissatisfied. When supervisors, personnel counse- 
lors, or representatives in union meetings report that employees are be- 
coming more demanding, somewhat sullen, less co-operative, and more 
radical, it can also be concluded that their attitudes are unfavorable. 
Thus the advantage of this method lies in its obviousness; the existence 
of unfavorable or favorable attitudes is apparent to anyone who keeps 
his eyes and ears open. Casual and cursory observation is often enough, 
although more detailed analysis is invariably worth while to show how 
the "winds are blowing." 

Direct observation suffers from two major disadvantages. First, it 
is backward- rather than forward-looking. The tenor of employee think- 
ing is not determined until the damage has been done. Hence the 
method is negative in effect; it is curative rather than preventive. Sec- 
ond, it is study by deduction. Although the observed results may be 
described accurately, their causes may at best be only indirectly and not 
directly observed. Hence corrective programs may be aimed at the 
wrong aspects of employee thinking and attitudes. 

When the advantages and disadvantages of direct observation are 
weighed together, the net result seems to favor its use under two con- 
ditions. First, observational methods can add balance to methods that 
seek more directly to measure attitudes. And, second, usually much in- 
formation can be derived so easily by direct observation that it would 
be wasteful indeed to disregard its contributions. 

The methods of measurement to be discussed now are based upon 
the principle that trouble can be avoided or minimized if steps are taken 
to detect and correct the attitudes which bring on unfavorable action. 
In this sense, they are forward-looking. They lay stress upon the prin- 
ciple of prevention rather than cure. 



BASIC ASPECTS OF EDUCATION 303 

2. Employee-Initiated Plans. Employee-initiated methods are 
those by which the employees themselves present their thinking and 
ideas to management. Employees are expected to express their opinions 
voluntarily, although management may provide some facilitation or en- 
couragement. How this is done may be shown by describing the more 
common types of plans coming under this heading. 

The "open-door" policy is an example often encountered. Under it, 
executives claim that their doors are open at all times to anyone who 
wishes to present a grievance. The mere statement on the part of exec- 
utives that the door is open is considered enough to insure that em- 
ployees will avail themselves of the privilege. Suggestion and question 
boxes are also commonly used as means whereby employees can feel 
free to express themselves. Under more advanced plans, boxes are stra- 
tegically placed, their use is explained in various ways, and the identity 
of users is protected. And, finally, some companies establish procedures 
whereby employees may unburden themselves to counselors in the per- 
sonnel department or to labor relations experts not connected with the 
departments for which they work. Here again, better plans provide 
for trained interviewers who are patient and understanding and who do 
not have prejudices and axes to grind. The interviewers and counselors 
do not take the initiative but await visits from any employees who may 
wish to call upon them. 

The advantage of this method lies in the willingness of a company 
to allow employees freely to present their views. Rather than searching 
into their views and attitudes, it places the opportunity for initiating 
action in the hands of the employees. Presumably, any sign of pressure 
from management is thereby removed. 

Beyond this, the employee-initiated method has serious drawbacks. 
Most employees are reluctant for one reason or another, unless their 
grievances are very serious, to talk to their supervisors about their 
troubles. The superiors themselves, for all of their apparent availability, 
inhibit rather than induce employee discussion. The "open-door" policy, 
for example, when examined is found to have few, and in many cases 
no, footprints of employees in the doorway. Second, employees are 
aware of their language limitations. Hence the majority do not want 
to undertake the task of writing out suggestions, asking questions, or 
telling their stories. Of the small minority who do express themselves, 
a large part is made up of chronic complainers or "back-slappers" who 
distort the impression which management receives. And, third, even 
the well-intentioned employee who does take advantage of this oppor- 
tunity, invariably does not know what really is his trouble. He may 



304 PERSONNEL MANAGEMENT 

complain about wages when the source of irritation is his supervisor. 
Hence, to rely upon his expressions may lead to the creation of another 
problem — maladjustment of wages — rather than the correction of the 
real trouble. 

3. Employer-Initiated Plans. Employer-initiated plans of 
measuring employee attitudes are of two kinds: the interview and the 
questionnaire. The first is a person-to-person discussional method, and 
the second is an impersonal broadside approach. Each has a number of 
variations, the more important of which will be described here. 

a) Interviews. Interviews may be guided or unguided. In the 
guided interview, conversation is subtly directed to bring out the salient 
features for which purpose the interview has been arranged. Usually a 
definite outline or pattern of questions is memorized by the interviewer. 
In that way, he keeps the interview from rambling unduly, makes sure 
that all points are covered, and can make a better formal record of the 
interview. In the unguided interview, the worker is encouraged to talk 
about anything on his mind. The encouragement is done with a mini- 
mum of talk and, preferably, with no guidance, except to get the em- 
ployee to talk. The theory is that in this way the talk will almost inevi- 
tably gravitate toward his problems and troubles. 

The personal contact upon which it invariably depends provides the 
chief advantage of the interview. Its informality makes for flexibility; 
it can be adjusted to meet the needs of individual cases; and all em- 
ployees are not cast in the same mold. Moreover, personal discussion 
affords some emotional release, which other methods do not. These ad- 
vantages are even stronger in the unguided interview because the em- 
ployee is led to volunteer his own ideas and feelings as they occur to 
him. 

The chief disadvantages of the interview method are cost and time 
of operation. In the first place, interviewing takes more time than other 
methods of getting at information. The interviewer must establish rap- 
port, he must avoid the feeling of rushing, and he must allow the in- 
terviewee to express himself in his own words. When all employees are 
interviewed, a considerable amount of time is lost from regular opera- 
tions. In the second place, well-trained and skilled interviewers must 
be used, or interviews may be worse than useless. Hence this is a costly 
feature. The unguided interview, particularly, calls for exceedingly 
skilled interviewers and time-consuming discussions so that employees 
can get things "off their chest," in their own way. 

Balancing the advantages and disadvantages leads to the conclusion 
that the interview is best used when the problems on the minds of the 



BASIC ASPECTS OF EDUCATION 305 

employees and the troubles besetting employee relations are sufficiently 
serious to outweigh the cost and time of interviewing. Besides, it is a 
desirable tool when used in combination with the other methods. Thus 
it would be well to use interviewing in departments or with groups of 
employees from which other methods of attitude testing have brought 
trouble reports. But in any event, the warning is pertinent that inter- 
viewing should not be used unless skilled interviewers are available. 

b) Questionnaires. Questionnaires, requiring written response to 
printed questions, are being increasingly used to measure attitudes. 
They may be sent to the employee's home to be filled out there, or may 
be given on company time. They may ask questions that can be an- 
swered: first, in yes-or-no and true-or-false fashion; second, by choosing 
from a group of several possible responses; and, third, by ranking lists 
of items of varying degrees of favorableness. They may be limited to a 
few subjects or cover practically all phases of employee relations. 

Results from the questionnaire method can be obtained relatively 
cheaply and quickly. Questionnaires can be given to large groups of 
people within a short period of time by inexperienced help. Responses 
can be secured which are highly specific, are easily marked for tabula- 
tion, and yield satisfactory measures of attitudes. 

The chief disadvantages of this method are the same that apply to 
any questionnaire. Are the questions constructed so that they really ask 
what the inquirer wants to know? Will the one who answers the ques- 
tions interpret them as intended? Will he give his real thoughts? Are 
there leading questions? Is the questionnaire too long and complicated? 
Is it useful for present purposes, even though it is impersonal? 

Thus the scale is balanced in favor of the questionnaire method 
when the attitudes of large numbers of employees are to be measured 
in relatively short periods of time. It is assumed, of course, that ques- 
tionnaires are skillfully constructed, administered, and evaluated, else 
the results are of no value. Some, although their extreme criticism 
seems unjustifiable, even go so far as to argue that questionnaires rarely 
provide useful measures. 

REPORTING FINDINGS 

After information is gathered, it must be summarized. For example, 
a simple way of reporting results is to give the number of employees 
who expressed various views on a variety of subjects. Figure 62 (p. 
306) is an example of this method. Another way is to show the per- 
centages of employees who held particular views on the questions asked. 
Figures 63, 64, and 65 (pp. 307 and 308) are examples of this method. 



306 



PERSONNEL MANAGEMENT 



No. of 
Employees 

900 
800 
700 
600 
500 
400 
300 
200 
100 



FIGURE 62 

THE BLANK COMPANY 

SURVEY OF ATTITUDES OF HOURLY RATED EMPLOYEES 
February 1 

















































































































































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How much 
instruction do 
you get when 


When 
problems 
come up in 
your work, 
now free are 
you made to 
feel to ask 
questions? 


When personal 
problems come up, 
how much considera- 


If you had any cause 
for dissatisfaction, 
what would your 


you are given 
new work or new 
methods on the 
job? 


tion and cooperation 
do you feel you 
receive? 


chances be of getting 
a fair hearing and 
a square deal? 



When there is a 
better job vacant, 
how often does the 
best qualified person 
get it? 



These figures also illustrate the use of cartoons and descriptive material 
in bringing out the meaning of the answers. 

More complicated systems have been devised in which numerical 
measures of morale for an employee, department, or the company are 
obtained. This is done in the following way: 

1. Numerical values are arbitrarily assigned to all possible responses on 
various questions. For example, the responses for the following question 
are given the following values: "Do you get a fair answer from your 
supervisor when you ask about wages?" 

Always 8 

Usually 6 

Sometimes 4 

Seldom 2 

Never 

2. The numerical values of all answers are weighted. Thus the question just 
cited is given a weight of 3 as compared to a weight of 1 given to the 
following question: "Do you read the descriptions of company products 
in the company newspaper?" 

3. The values on the answers are thus arranged to give an over-all expression 
of morale. For example, the morale of a given employee may be 4.5, of 
his department 6.3, and for the company as a whole 3.8. 

Such measures, though arbitrary, have the desirable feature of mak- 
ing various comparisons possible. Departments may be compared, or a 



BASIC ASPECTS OF EDUCATION 

FIGURE 63 



RATING MANAGEMENT 




How Do You Think Your Company 
Management. In General, Compares 
With That of Other Companies? 



307 



3$% say "Above average' 
59% say "About the same' 
S% say "Below average" 



FIGURE 64 



PROMOTIONS 



I WAS GLAD TO 
SEE JOE GET 
PROMOTED- / 

HE DESERVED IT' 



hah! hesnuttin' 

but a ol apple 

polisher/ 




Do You Think the Company Selects the 
Best Qualified People for Promotion? 



40% say "Most of the time' 
52% say "Part of the time" 
8% say "Almost nevei" 



308 PERSONNEL MANAGEMENT 

FIGURE 65 



CAFETERIA 



GOOD FOOD AT A 
REASONABLE PRICE / 
SUITS ME TO A *T"'i 







lHE survey disclosed that employee thinking with respect to 
individual recognition extends to an appraisal of steps taken by the company to 
provide for the comfort and convenience of the working force in addition to facilities 
directly connected with the job. 

Cafeteria facilities, food quality and prices meet with general employee approval. 
Here is how employees rate cafeteria services: 

26% say "Consistently good" 
34% say "Good most of the time" 
32% say "Satisfactory" 
8% say "Unsatisfactory" 
78% say "Prices are reasonable" 
22% say "Prices are excessive" 



given department may be compared with the company averages, or 
trends may be compared. Of course, such measures are arbitrarily con- 
structed; they should be used carefully and their limitations understood. 



RULES OF MEASURING ATTITUDES 



Although a number of suggestions have been made in the preceding 
discussion, several more are worth noting if the results of attitude meas- 
urement are to be valid and reliable. In the first place, attitude measure- 



BASIC ASPECTS OF EDUCATION 309 

ment should not be viewed as a single-process program. No company 
contemplates taking just one inventory of materials; nor should it be 
satisfied with a single inventory of attitudes. Such a program should 
provide for continuous measurements at definite times. This will pro- 
vide significant indications of trends as well as information of use at 
particular times. 

In the second place, employees must feel completely assured that 
none of their statements is used to their disadvantage. When question- 
naires are used, every precaution should be taken to preserve anonymity. 
This is not possible in the interview, hence it is important for the inter- 
viewer to convince the employee that his confidences will in no way be 
violated. Along similar lines, the results of attitude testing should not 
be used to establish rules which will work to the detriment of the em- 
ployees. If any such association should develop in the minds of the 
employees, it will be improbable that they will ever express their 
opinions. 

In the third place, it is necessary to be aware of errors that should be 
avoided. First, it is essential to accept with reservation the views that 
employees express, since people are reluctant to reveal, and often hold 
back unknowingly, their true feelings. Second, it is essential to know 
the time, place, and conditions under which answers were given because 
these and the effect of recent events color replies. Third, it is essential 
to avoid simple and generalized conclusions, since people are complex 
beings with varying degrees of satisfactions and dissatisfactions that 
cannot easily be disassociated. 

And, finally, the organization structure, which is established for the 
purpose, has much to do with the success enjoyed by a program for test- 
ing employee attitudes. Hence it should be planned with care, and its 
scope and place carefully explained to all concerned. If the company 
in question is too small to warrant assigning this work to its own staff, 
an outside consultant may be called in to make the survey. This prac- 
tice is sometimes suggested in large companies. When it is deemed nec- 
essary to remove any appearance of company dictation or when company 
executives may be suspect, outside sources should be secured. Otherwise, 
this activity should be handled by permanent members of the organ- 
ization. 

The personnel department is the organization unit in which this 
work logically belongs. These activities may be assigned to existing units 
in personnel, such as the employee service or employee relations sec- 
tions, or new units may be created for the assignment. In any event, it is 
highly desirable to appoint someone who has a sound background in 
psychology and psychological methods, whether acquired through for- 



310 PERSONNEL MANAGEMENT 

mal education or through personal effort. An untrained person can do 
infinite damage here. 



ENCOURAGING EMPLOYEE EXPRESSIONS 

Throughout the foregoing discussion of the upward flow of informa- 
tion, there has been a concern with "truth." Are we finding out what 
employees really are thinking? Do we know what they really feel and 
believe? Are we getting a true picture of their attitudes? These questions 
are warranted. Unless the real facts are disclosed, managerial action will 
be ineffective, if not actually dangerous, since it stems from inaccurate 
appraisals. 

How well employees reveal their true feelings and attitudes is largely 
determined by the confidence which they have in the essential fairness 
of management. Management's actions are therefore a major causal 
factor in getting or not getting the "truth" from employees. In every- 
thing that management does — from top executive to first-line super- 
visor — the attitude of employees is being conditioned. Top manage- 
ment's plans and policies determine the whole course and personality 
of a company. But it is the supervisor or foreman who influences the 
employee day in and day out, no matter what top levels may be think- 
ing. Hence the policies of the supervisor become the policies of the 
company to the employee. If top management wants its policies carried 
out, it is imperative that supervisors be directed and controlled along 
desired lines. Only then will there be consistency in management's ef- 
forts to affect the attitudes and actions of employees. 

When the philosophy and actions of management all along the line 
are right, techniques and procedures for encouraging employee expres- 
sions will be more fruitful. Everything from suggestion systems to 
grievance machinery, from counseling of employees to attitude surveys, 
and from interviews to observation can be utilized with greater confi- 
dence. But always the use of techniques must be buttressed by vigilance 
in convincing employees that every member of management governs all 
his actions by the test of fairness to all, and with prejudice to none. 

QUESTIONS AND PROBLEMS 

1. Distinguish between the terms "training," "education," and "communica- 
tions." How would "indoctrination," "induction," and "propaganda" fit into 
your differentiations? 

2. What are the various goals of education? Do any of them seem overly 
idealistic to you? 



BASIC ASPECTS OF EDUCATION 311 

3. Distinguish between "know-how" and "know-why." What is their relation 
to motivation? 

4. To what extent is education a logical process? An appeal to emotionalism? 

5. What arguments favor basic, broad, and general education for operative 
employees as well as executives? Why should industry concern itself with 
such education? 

6. Define the term "morale." What are the factors affecting morale? What are 
the effects of good morale? 

7. How would you proceed in a given case to show how employee willingness 
to co-operate is changing from month to month? 

8. What is meant by the "process of morale development"? What steps are 
included in this process? 

9. Analyze critically the term "prerogatives of management." Are the interests 
of labor identical, opposed, or partly both? Explain. 

10. Discuss the advantages and disadvantages of interviewing as a method of 
learning employee attitudes. 

11. How may the relationships between company objectives and personal ob- 
jectives be described or disclosed to employees? 

12. In a given company prevailing base wage rates are maintained at least 5 
per cent above community levels, yet employee morale is rather low. What 
reasons may be offered in explanation of this? 

13. Why do most people think that they are good judges of people? What evi- 
dence can you offer in support of the argument that most people are wrong 
in this belief? 

14. In conducting an employee attitude survey, what difficulties must be circum- 
vented — among employees, among executives, and among the survey staff? 

15. Conduct a survey on some subject as: "What do you think of unions?" or 
"Should management prerogatives be upheld by law?" Use two different 
population samples; e.g., students who have worked in industry and those 
who haven't. What difference can be ascribed to background differences? 
What is the moral? 

16. Regarding the interchange of information and views between executives 
and employees, in your opinion where should the interchange start and 
where should it stop? Explain. 

17. If you found that a given employee — only 1 out of 1,000 — held the wrong 
ideas about company profits, would you or would you not do anything about 
"sharing information" with him? If 999 out of 1,000 had misconceptions, 
what would you do? 

18. What right has a company to delve into an employee's opinions about him- 
self or about his economic, social, or political attitudes? 

19. Many companies have found that their employees often hold a conglomera- 
tion of correct and incorrect impressions. What would you conclude about 
the suggestion that it is as important to find out why they hold correct im- 
pressions as to find out why they believe the incorrect points? 

20. How would you determine whether or not in a given case the "open-door" 
policy of determining the existence of grievances is effective? 



CHAPTER 



16 



The Educational Program 



After the successive managerial levels have learned the attitudes and 
opinions of employees, the educational process can then be reversed 
in direction. Upward have come ideas, comments, reactions, attitudes, 
and reports through all levels from the very lowest. Now downward 
must flow clarifications, interpretations, orders, instructions, and poli- 
cies. 

This two-way flow of communications completes the circle of a well- 
rounded educational process. Each direction of flow should stimulate 
and be stimulated by the other. In fact, several exchanges, up and down, 
may be needed to complete the education on some subjects. For this 
reason, the phrase "sharing information" is perhaps a clearer term of 
best practice. Certainly, the downward flow is apt to be better designed 
and much more effective when it is based upon a clear understanding 
of what employees are thinking (or not thinking) about various sub- 
jects. 

What is said in this chapter should constantly be viewed, therefore, 
in terms of what was said about the upward flow in the preceding chap- 
ter. The downward flow of education presupposes an effective upward 
stream of communications. In this discussion of the downward flow, the 
subject will be taken up under the following headings: 

1. Education of the several managerial levels 

2. Content and conveyors of education and communications 

3. Rules of education and communication 

4. Organizing the educational program 

EDUCATION OF THE SEVERAL MANAGERIAL LEVELS 

If the education of the employee is to proceed satisfactorily, the 
leadership of ideas must stem from the top of the organization down 
through the intervening managerial levels. Hence it is advisable to re- 
view educational practices for ( 1 ) top management, ( 2 ) middle man- 
agement groups, and ( 3 ) supervisory levels. 

312 



THE EDUCATIONAL PROGRAM 313 

1. Top Management Groups. One of the most significant 
movements in the past ten years has been that concerned with top-level 
executive development. This is a most encouraging trend, and one for 
which management deserves the utmost credit. It takes real courage for 
any executive to concede that he needs to learn more about his job. 
Particularly is this true of those who have reached the top. After all, 
hasn't the top-level group reached those heights because of ability and 
skill? Although this is true, there has nonetheless been a widespread 
acceptance of the idea of continuing education for higher execu- 
tives. 

Emphasis in such education has to do mainly with managerial con- 
cepts and organizational subject matter. This tends to insure the employ- 
ment of the best possible administrative techniques. Inasmuch as the 
executive levels must operate through others to accomplish the objec- 
tives of the enterprise, such emphasis is warranted. Thus education in- 
quires into questions of whether or not correct designs of planning, 
organizing, and controlling are being used at top as well as lower levels 
in the company, and also whether or not top-level executives act in their 
realms in a constructive manner. 

When subject matter of a managerial character has been reviewed, 
technical subjects may then be well considered by top executives. Here 
a variety of topics suggest themselves. Until top management educates 
itself about such questions as the following, it can scarcely expect lower 
levels of management to know how to communicate with workers: 

1. What are the social responsibilities of management? 

2. How do these responsibilities change with time? 

3. To what extent is business liable for the various risks which endanger 
employees? 

4. To what extent are profits reasonable and justifiable? 

5. Can workers be loyal to both the company and the union? 

6. What are realistic policies toward political activities on the part of the 
company? 

7. What are just wage levels, and how can they be proved? 

8. What are the real roles of management, capital, workers, and unions? 

9. To what extent, and how, should employees participate in managerial 
decisions of importance to them? 

These are significant questions. Anyone who assumes that he alone is 
gifted to answer them or has derived final answers to them is riding for 
a fall. So the movement of top executives to take counsel on them repre- 
sents a most wholesome advance in labor-management relations. 



314 PERSONNEL MANAGEMENT 

2. Middle Management Groups. The task of education of 
middle groups of management tends to include the following three 
major areas: 

1. To learn precisely the educational plans of top management 

2. To co-ordinate the educational responsibilities horizontally of various line 
and staff units 

3. To transmit specific educational plans to lower supervisory levels and 
ultimately to employees 

The nature of these educational responsibilities is readily apparent, so 
that brief comments concerning them will suffice here. If it is significant 
for top levels to continue acquiring an education, it is equally, if not 
more, so for those who are as yet moving up the line. Moreover, since 
the middle groups stand between the top and the bottom, they occupy 
a strategic position affecting labor-management relations. They must 
be adequately prepared to transmit accurately, and to control construc- 
tively, the plans, policies, and ideas of the top levels. 

The middle management groups determine also the degree of con- 
sistency and uniformity with which employees in the various divisions 
of a company will be educated. Hence co-ordinating educational sessions 
are particularly needful here, so that production and personnel units, let 
us say, take the same views on how the ideas of top management are to 
be carried out. When such units operate at cross-purposes, even though 
with the best of intentions, the destructive effect upon employees is 
beyond measure. 

This crosswise interchange of ideas leads some to conclude that 
organizational communications are essentially three- rather than two- 
dimensional: up, down, and across. The evidence favors such a conclu- 
sion. Even though the main flows may be up and down, crosswise co- 
ordination is increasingly important as a company grows. The various 
functional and staff units must be brought into a common plan of 
thought, if the top and the bottom are to work together effectively and 
harmoniously. 

3. Supervisory Levels. In the thinking of many, the education 
of supervisory levels of management is the key factor in employee edu- 
cation. Without doubt, day in and day out the supervisor is in closer 
contact with workers than any other management level or unit. In the 
formal organization structure, it is the foremen and supervisors who are 
"management" to the workers. And, even informally, workers tend to 
feel that the supervisors determine how well they will or will not be 
treated as individuals. And when channels of communication are fol- 
lowed, it is through the supervisors that most information will be chan- 



THE EDUCATIONAL PROGRAM 315 

neled downward and upward. Indeed, they may be bottlenecks, mis- 
interpreters, and deceivers — or the reverse, depending upon the kind of 
education to which they are exposed by upper managerial levels. 

Granting the truth of these contentions, any neglect of supervisory 
education is to be condemned. Moreover, such education is greatly 
needed because few, if any, supervisors learn anything about the educa- 
tional phases of their jobs before they become supervisors. They step 
into their managerial responsibilities with practically no knowledge of 
what is expected of them or how their obligations are to be performed. 
So, added to the fact that they are asked to carry out certain tasks, there 
is the fact that supervisors generally don't know how to carry them out. 
Therefore, it is manifest that this group must be educated not only in 
the various subject matter which top management considers important 
but also in how to get such subject matter across to the worker. No 
wonder that some feel that one of the biggest jobs of a supervisor is to 
learn how to be a good teacher. 

COMMUNICATION CONTENT AND CONVEYORS 

The key point of communications is, of course, the message. Through 
the message, the executive hopes to educate the employee. And thereby 
are to be changed the attitudes, opinions, the information, and — ulti- 
mately — the behavior of the employee. The content of such messages is 
therefore important. But since messages must be transmitted through 
some agent ( human or mechanical ) , it is important to give considera- 
tion to this aspect of communications. Hence the content and the con- 
veyor are discussed together here, because they are so closely related. 

In the space of this section only excerpts and selected illustrations 
of communication content and conveyors can be given. It is not possible 
to examine the extent to which such content should be developed or 
the pros and cons of usage of various conveyors. It is hoped that the 
examples will serve to disclose typical content and usages. The materials 
in this section will be grouped under the following headings of typical 
subject matter, while examples of conveyors from the classification that 
follows will be incorporated in the discussion of communication topics: 

1. Major topics included in communication programs 

a) Company history, objectives, and services 

b ) Company organization, finances, and operations 

c) Personnel objectives, policies, and practices 

d) Economics and the American system 

e) Political and community relations 

2. Major groups of communication conveyors 
a) Individualized, personal contacts 



316 PERSONNEL MANAGEMENT 

b) Group personal contacts 

c) Written media 

d) Demonstrations and displays 

e) Radio, television, films, and recordings 

1. Company History, Objectives, and Services. The sig- 
nificance which an employee feels is in part due to the importance which 
he and his associates attach to the company. If he knows nothing of a 
company's history, objectives, and services, he can take little pride in his 
company. An avoidable loss in significance is taking place. It is wise, 
therefore, to give him such information. A number of plans may be cited 
in this connection. 

The induction program for new employees is a common way of 
communicating the message of company history, objectives, and serv- 
ices. Part of the personal conferences of new employees with staff mem- 
bers of the personnel department and with their respective supervisors 
may be devoted to such subjects. At this time, too, some companies have 
used films to highlight the story of how the company was founded, by 
whom, and some of the early trials and tribulations. The story can be 
brought up to date to show the present position of the company in the 
industry. 

Booklets are often used to cover these subjects. They are relatively 
inexpensive for presenting the story of a company's origin and growth. 
Moreover, they have a degree of permanence which films, for example, 
do not have, as far as ready reference to them is concerned. But to induce 
workers to read them is a problem. In this connection, well-designed, 
excellently illustrated, and carefully worded copy are helpful. An in- 
teresting case of stimulation is provided by one company which de- 
veloped a quiz game, based upon plant publications and meetings, to be 
played during the lunch hour. 1 Winners were given free lunches for 
answering correctly questions about the company's history, products, 
and personalities. 

Plant publications are also used to provide materials about the back- 
ground of a company. The Reed and Barton Company of Massachusetts 
prepared a special issue of its The Silver Lining on its 125th anni- 
versary. After an opening statement by the chairman of the board on 
the lessons of this extended period of growth, the publication covered 
such subjects as how management had sought to provide job security, 
the influence of quality production, the importance of various specialists, 



1 For some of the illustrations cited here, the author is indebted to the Case Book of 
Employee Communications in Action, published under the sponsorship of the National As- 
sociation of Manufacturers, 1950. 



THE EDUCATIONAL PROGRAM 317 

and a review of various company operations. Somewhat similarly, the 
Studebaker Corporation used a yearly "special edition" of its bi-weekly 
Forging Ahead to review company history and to describe and explain 
operations, organizational matters, and personal benefits. 

Product display boards are used by the AC Spark Plug Division of 
General Motors Corporation to help employees visualize their con- 
tributions to the final product. Cutaway models serve to show each part 
of the product, its name, and its purpose. Plant tours are also used to 
give employees a better understanding of these matters. Some com- 
panies show displays of competitive products, so that employees will 
understand the task facing the company in maintaining its position in 
the industry and in meeting competition. 

2. Company Organization, Finances, and Operations. 
This area of subject matter receives a great deal of attention from many 
companies. The reason is that it is necessary to help an employee see 
how he fits into the structure and operations of the company. Group 
meetings have been widely used to explain current problems of the 
company to employees. One company holds regular monthly meetings 
in which various executives take turns in explaining the cost and profit 
position of the company. Supervisors are briefed before the meetings so 
that they will be in a better position to carry on with the explanations in 
their own departments. 

Television has also been employed for this purpose. The Detroit 
Edison Company used a seven-minute film in which the president and 
the board chairman were televised highlighting the company's opera- 
tions. 2 To insure a wide audience, advance notices of the time and chan- 
nel station were given to employees, stockholders, and customers. The 
program also was used to commend employees for their contributions 
to the company's success and for their safety record. 

The comic-book format has been used by the American Type 
Founders in presenting its annual report to employees. This presentation 
serves in a graphic and interesting way to describe its many operations, 
as well as to bring out the workings and benefits of the American eco- 
nomic system. 3 

At the San Diego plant of Consolidated Vultee Aircraft Company 
the public address system is used once a week during a ten-minute rest 
period to tell employees about new orders or cancellations, about train- 
ing courses, and about other interesting news items. Every two weeks, 

2 Management Review, May, 1952, p. 283. 

3 "How Industry Is Using Comics," Factory Management and Maintenance, Vol. 
CVIII, No. 10, p. 82. 



318 PERSONNEL MANAGEMENT 

some member of management expresses some of his ideas of pertinence 
to employees and management, criticisms, or appreciation for opera- 
tional results. 

A very interesting program for discussing company operations is that 
of the Elgin National Watch Company. It illustrates the care and the 
co-operative attitude taken in designing communications. Each month 
a member of management is selected to discuss with employees some 
phase of management. To prepare himself, the executive selected meets: 

1. With an advisory group consisting of 

a) 5 foremen 

b) 4 members of the Job Masters Association 

c) 7 members of the Watch Workers Union (Independent) 

d) 4 members of the International Association of Machinists (Inde- 
pendent) 

e) 4 employees representing office personnel 

2. With an advisory group of 25 rank-and-file workers selected 

a) By shop stewards for union workers 

b) By supervisors of nonunion workers 

After discussions with these groups regarding matters they deem im- 
portant and the content which the executive deems of significance, a 
presentation is prepared that has been exposed to a wide range of con- 
structive suggestions and criticisms. 

3. Personnel Objectives, Policies, and Practices. Of im- 
mediate interest to employees is, of course, their financial and nonfman- 
cial returns and possibilities. It is understandable, therefore, why many 
companies concern themselves with communications in this area. Practi- 
cally all companies do some explaining of wages, hours, and employ- 
ment conditions during the induction process. But it would be foolhardy 
to stop there, because interest in these subjects continues throughout an 
employee's tenure with a company. 

Every conceivable conveyor has been used for communications in 
these areas. Undoubtedly the best here is the supervisor. He should be 
trained so that he can clearly and with conviction explain personnel 
policies and practices to his team of workers. The personal contact per- 
mits the supervisor to observe how well his messages are getting across, 
to shift his arguments and explanations to meet the individual needs 
of particular employees, and to tie his explanations into day-to-day work- 
ing situations. He can give the personal attention which practically 
everybody prefers to impersonal or mass media of communication. And 
when the competency of the supervisor in this regard is upgraded, this 
serves to make him a more confident leader, with a reward not only to 



THE EDUCATIONAL PROGRAM 319 

himself but also to the members of his group. When the area of human 
relations and personal interests is being considered, therefore, the super- 
visor deserves the greatest possible support. 

Personal interviews are often employed in this area. Again this ap- 
proach provides the personal touch. At the Procter and Gamble Com- 
pany, for example, each supervisor reviews with each of his workers his 
personal situation with respect to wages, desirable benefit plans, profit 
sharing, pensions, vacations, and holiday arrangements. The Budd Com- 
pany uses such man-to-man interviews to discuss safety practices on 
specific jobs. Interviews are used by the American Machine and Foundry 
Company to be sure that employees know what their jobs are, how they 
are getting along on them, what the future has in store, and whether or 
not they are using all the help their supervisors can give them. 

Even though the supervisor is well qualified to communicate in this 
area, the use of other media is also desirable. Indeed, this subject matter 
is of such vital importance that enough could never be done in explain- 
ing and interpreting personnel policies and practices. So, in addition to 
supervisory channels, booklets, for example, have been used by the 
Bristol Myers Company to answer questions frequently asked about its 
retirement income plan and by the Schenley Distillers Corporation to 
explain its pension plan. The Republic Steel Corporation incorporates a 
"letter" in its monthly employee magazine for such purposes. 

Group meetings have also been used in this area of communications. 
At the Kimberly Clark Corporation, the plant manager and personnel 
manager have a weekly discussion meeting with a group of 20 to 25 
plant employees. Each employee is included at least once a year. Em- 
ployee forums — of large as well as small groups — are sponsored by the 
Western Electric Company at which subjects of interest are covered by 
company or outside speakers. The Thompson Products Company uses 
informal dinner meetings at which written questions are answered by 
a panel of management "experts." 

Interesting examples of communications may also be cited in con- 
nection with questions of job security and union-management relations. 
Many companies have taken pains to show how job security is tied in 
with competitive leadership and high productivity. From the positive 
side, employees are told such things as "the success of a company de- 
pends greatly on you"; "job security and job opportunity depend on 
satisfying the customer"; "the security of your job is wrapped up in im- 
provements of quality, reliability, and reputation." And when layoffs 
are likely, it is well to advise employees on prospects for re-employment 
in terms of — 



320 PERSONNEL MANAGEMENT 

a) The company situation, so that damaging rumors among employees are 
minimized 

b ) What is being done to reduce the numbers of layoffs 

c) The order of layoffs, should they come 

d) The probable length of layoffs 

e) What employees laid off should do to keep the company informed of 
their availability for recall 

As to union-management relations, much is being done to improve 
mutual understanding. For example, union and company officials have 
taken joint tours of their own plants as well as those of competitors to 
promote a better understanding of their own positions and problems. 
A booklet has been used by the Pittsburg-Plate Glass Company on a 
Charter of Labor Relations for Foremen and Stewards, so that the com- 
pany position can be made known to employees, supervisors, and union 
representatives. Other companies are using columns of their periodicals 
to give union news, views on union relations, and explanations of con- 
tract clauses. Many companies also use conferences and meetings with 
supervisors to gain their views and to clarify their understanding of 
labor-management problems. Thereby the ability of supervisors to trans- 
mit the messages to employees is improved. 

4. Economics and the American System. One of the most 
interesting phases of education has been along lines of increasing eco- 
nomic understanding. The movement has gained strength particularly 
in the last several years because of the belief that an employee who does 
not comprehend how our ecdnomic system works cannot feel confident 
about the fairness of his wages, the reasonableness of profits, or the sig- 
nificance of the capitalistic system. Hence industry itself and various 
public and private institutions have interested themselves in disseminat- 
ing economic knowledge. Interesting as are these efforts, space here 
permits only the citation of a few examples of various types of efforts 
along these lines. 

A number of devices and approaches have been used to advance 
economic education among workers. For example, the Inland Steel 
Company and the Borg- Warner Corporation developed a series of four 
films which attempted to show the following: 

1. How We Got What We Have 

2. What We Have 

3. How to Lose What We Have 

4. How to Keep What We Have 



4 These films have since been taken over by the American Economic Foundation for 
purposes of general distribution. 



THE EDUCATIONAL PROGRAM 321 

After each of the films is shown, a discussion period is devoted to an 
examination in detail of the particular subjects. 5 

The Du Pont Company developed a conference method program 
with a board-type of presentation in this connection. This conference 
concerns itself with the features of the American economic system, its 
accomplishments, the place of competition, the place of individual free- 
doms in the system, and the place of the company in our system. A 
trained conference leader first conducts an appreciation session over the 
whole subject matter. Then he leads three one and one-half hour dis- 
cussion sessions, based on a broad presentation. He also trains others to 
conduct conferences on the program. The technical aspects of the 
program have since been made available for general distribution 
through the National Association of Manufacturers. 

The Republic Steel Corporation also uses a conference program, but 
on a more extensive basis. Its program contains fifteen sessions and in 
the first year was restricted to supervisors. The conferences are built 
around lectures, discussions, and visual aids. This program is now avail- 
able for general distribution through the University of Chicago, and has 
as its objectives the following: 

1. Raising the level of knowledge and understanding about the economic 
system and how the corporation fits into it 

2. Providing a framework for analyzing and appraising economic proposals 
and problems 

3. Developing in individuals an appreciation of the role to him of the 
corporation and the economic system 

4. Developing confidence in the corporation and the system 

5. Encouraging desirable changes in attitudes and behavior both on and off 
the job 

5. Political and Community Relations. In addition, some 
industries have worked closely with various community agencies and 
groups to make education a community project. An example of such co- 
operation is illustrated in Figure 66 (p. 322). The instruction in such 
instances has been intended to support the following propositions and 
procedures : 

1. Every citizen benefits from industry's growth. 

2. You are entitled to the facts. 

3. Collective bargaining is the one practical means to assure fair wages, 
reasonable hours, satisfactory working conditions. 

4. All employees, as well as management, benefit by improving productive 
efficiency. 



5 A very useful survey of various programs similar to this may be found in Dillard E. 
Bird's Survey of Economic Education (Dayton: Foremanship Foundation, 1951). 



322 PERSONNEL MANAGEMENT 

FIGURE 66. Organization Chart of Community Groups'* 



EVANSVILLE COOPERATIVE LEAGUE 
EVANSVILLE, INDIANA 

AN EDUCATIONAL INSTITUTION TO CREATE 

A BETTER UNDERSTANDING OF EVANSVILLE 

INDUSTRIES 



RESEARCH AND WRITE 

EDITORIALS. BOOKLETS. 

NEWS. QUESTIONNAIRES. 

COMPETITIONS. SPEECHES. 

RADIO PROGRAMS. REPORTS 



PUBLICATIONS 

EDITORIALS 

BOOKLETS 

NEWS 

COMPETITIONS 

QUESTIONNAIRES 



STEERING COMMITTEE 



CIVIC 
LEADERS 



SECRETARIAL 
AND OFFICE 
MANAGEMENT 



CONTACT AND EXECUTIVE 

EMPLOYERS AND SUPERVISORS. 

CLERGY, EDITORS AND EDUCATORS, 

CIVIC AND PROFESSIONAL LEADERS 

AND ORGANIZATIONS 



SPEAKERS 

ROUND TABLE 
SMALL GROUPS 
FOREMEN'S CLUB 

NOON CLUBS 
PUBLIC FORUMS 



MOTION PICTURES 
AND SLIDE FILMS 

THEATRES 

EMPLOYEE MEETINGS 

SUPERVISORS AND 

FOREMEN 

CIVIC AND CHURCH 

ORGANIZATIONS 



RADIO PROGRAMS 

DRAMATIZATION 

OF INDUSTRIES 

LOCAL INDUSTRIAL 

SPEAKERS 

RECORDING AND 

ELECTRICAL 
TRANSCRIPTIONS 




GENERAL PUBLIC 

I 



SUPERVISORS 
AND FOREMEN 



EMPLOYEES 



OTHER 
EMPLOYERS 



* Source: Thomas J. Morton, "Public Relations Job," Factory Management and Maintenance, December, 
1938, p. 40. 



5. Citizens should be protected in their right to work. 

6. The American system of industry is best for everybody. 

7. Management and wage earners have mutual interests, need close personal 
relations. 

8. Management is obligated to give a square deal to every employee in the 
shop. 

9- Adherence to the letter and spirit of the law avoids strikes except after 
all means of peaceful adjustment have been exhausted. 
Demands for recognition as sole bargaining agency only after an im- 
partial election proves more than 50 per cent of employees have chosen 
the agency. 

11. No coercion or intimidation in choosing a bargaining agency. 

12. After the bargaining agency is chosen, bargaining to proceed. 

13. Any differences irreconcilable by collective bargaining to be mediated 
by a board — one chosen by management, one by workers, the two to 
choose the third. 

Strike to be called only after mediation has failed to bring agreement, 
and after strike authorized by secret ballot of more than 50 per cent of 
all properly qualified employees. 



10 



14 



THE EDUCATIONAL PROGRAM 323 

RULES OF EDUCATION AND COMMUNICATIONS 

In operating a program of education and communication, it is de- 
sirable to base plans upon sound principles. A complete set of such 
principles is not available as yet and perhaps never will be. At the pres- 
ent state of knowledge, however, the following summary offers perhaps 
the best suggestions along these lines: 6 

1. General Principles. — 

1. No one communication technique will meet all needs. A communica- 
tion program uses many techniques, methods, and channels. 

2. Confidence is a basic principle of communication. An employee who 
suspects that he is being sold a bill of goods will resent the com- 
municator's intrusion and will not be receptive to his message. 

3. Action speaks louder than words in communication. 

4. Each communication program needs to be tailored to fit the needs and 
wants of the individual human organization. 

5. Planning with regard to any major managerial decision should include 
planning for communicating it to those who will carry it out and 
those who will be affected by it. 

6. Generalized or "canned" communications cannot form the core of a 
communication program. Communications which are directed to 
everyone will probably fail to meet the specific need of anyone. 
"Canned" communication should be used only when it is comple- 
mentary to the central theme. 

7. Establish good daily communication. If employers communicate 
solely as a defense against attack, then employees may turn elsewhere 
for information. Or even worse, they may create in their own im- 
agination answers which will be worse than the truth. 

8. A person's ability to communicate tends to vary directly with his own 
understanding of the subject to be communicated. 

9. Management's effectiveness with communication tends to vary di- 
rectly with its belief in the importance and value of adequate com- 
munication. 

10. Respect for downward communication channels tends to be in direct 
proportion to the extent to which the supervisor receives and trans- 
mits information before the subordinate gets it elsewhere. 

11. Development of good communication relationships takes time. They 
cannot be built in a day — or a year — but they can be improved 
regularly. 

2. Preparing the Communication. — 

1. Communicate within a context. Each communication problem pre- 
sents a different situation. Each problem can be best solved in terms 



6 John F. Mee (ed.), Personnel Handbook (New York: Ronald Press, 1951), pp. 
833-34. These have been prepared by Professor Keith Davis. 



324 PERSONNEL MANAGEMENT 

of that situation. Both the communicator and the receiver gain more 
insight to the problem by dealing with it in context. 

2. Communicate in terms of the receiver's background. For example, 
economic concepts should be related to matters of practical economics 
familiar to the worker in everyday life. 

3. Communicate in terms of the receiver's self-interest. Communications, 
if they are to be welcomed, must be in terms of the receiver's interests 
and attitudes. One does not send television impulses to a telegraph 
receiver. 

4. Talking down to the receiver produces a negative response. Manage- 
ment may be superior to the worker in the organizational hierarchy, 
but as individuals both stand equal. Talking to the worker through 
the organizational hierarchy is different from talking down to him as 
an inferior individual. 

5. A communication will be better accepted and understood if it gives 
acceptable reasons for the particular viewpoint or fact that is being 
presented. 

6. Disclose the communicator's self-interest in communications. For 
example, why is management sharing this information? Unless the 
employee can see the self-interest of management in a communica- 
tion and its relation to his own self-interest, he will suspect manage- 
ment's sincerity and motives. 

7. Variety of communication methods and themes will help secure the 
receiver's attention. For example, poster locations may be varied. New 
voices may be used over the plant broadcasting system. Or the idea of 
"increased productivity" may be treated from different angles. 

3. Transmitting the Communication. — 

1. Communicate in small doses. People maintain interest in, and absorb, 
only a small amount of information at a time. 

2. Information to be retained for long periods should be repeated 
periodically. People forget easily, and the same facts need to be repre- 
sented now and then. 

3. The flow concept of communication requires that information and 
viewpoint flow both ways between management and employees. 

4. By-passing any level within the organizational hierarchy from presi- 
dent to worker will weaken the effectiveness of a communication 
program. It is especially important that the immediate supervisor be 
a central figure in the program. 

ORGANIZING THE EDUCATIONAL PROGRAM 

In concluding these remarks about education it is worth commenting 
upon three aspects of organizing the educational program; first, what 
organizational elements are involved in the program; second, where 
responsibility for educational programming should lie; and, third, how 
far the organization should carry its educational program. 

From what has already been said, it should be apparent that in an- 



THE EDUCATIONAL PROGRAM 325 

swer to the first point every level and segment must concern itself with 
education. In the formal structure, from supervisors to top management 
and crosswise between line and staff executives, there must be accept- 
ance of the educational obligation. But it would be unwise to overlook 
the flow of communications which takes place through informal chan- 
nels. The "natural" lines of communication should be "used," but with 
subtle care so that they do not go "underground" because of fear or mis- 
understanding. Also, the extra-formal structures of union channels 
should be employed to communicate information upward and down- 
ward. 

But when "everyone" is responsible, turning now to the second 
point, there is grave danger that no one will be responsible. Hence 
specific delegation of authority for leadership of an educational program 
is desirable. The personnel division is a natural choice here. It should 
provide leadership of ideas, but always submit program proposals to the 
appropriate line executives for suggestions and approval. The latter 
with line authority would then spearhead the execution of approved 
plans using the help of trained leaders supplied by the personnel divi- 
sion. Moreover, the personnel division can seek out help on educational 
matters from management consultants, educational institutions, profes- 
sional societies, and business and trade associations. Such an organiza- 
tional setup would serve to insure proper design of programs, minimum 
conflict between organization units, a strengthening of the work and 
support of line executives, and advantageous use of all sources of educa- 
tional resources and opportunities. 

In answer to the third point, it must be remembered that education 
has a utilitarian and selfish purpose. Communications with employees 
are intended to raise ultimately the productivity of the workers. Pre- 
sumably, their efforts will be more effective because they are better ad- 
justed to their working environment. 

So long as employee development proceeds along such lines, the 
educational program has substantial justification. But what if employee 
development is intended to change or clarify his basic economic, social, 
or political ideas? For example, a program may be undertaken to con- 
vince him that private enterprise is better than any form of government 
ownership; that a system of private investment is better than socialism; 
that the profit system is superior to national planning; that union mem- 
bership will bring no lasting benefits; and that management leadership 
is fairer and more democratic than union or political administration of 
industry. Such phases of education may be termed "indoctrination." To 
some this may mean propaganda or possibly unfair twisting of the truth. 



326 PERSONNEL MANAGEMENT 

Such opinions or criticisms are based, not upon the type of education, 
but upon its fairness, accuracy, and validity. And those who voice them 
may themselves indoctrinate or propagandize but see nothing wrong in 
it because they believe that the content of their programs is right and 
just. 

Hence the right to indoctrinate or propagandize is not the issue. 
Since capitalists ( "management" is too often used incorrectly as a syno- 
nym for this term) have so much at stake in a business enterprise, they 
should have the right to protect their investments by all legal and 
ethical means. This would include their right to instruct their manage- 
ments to carry on programs of indoctrination and propaganda in such 
matters as the principles and the desirability of capitalism. But to go 
beyond the borders of fairness in such efforts by employing high-pres- 
sure tactics and partial truths is at issue. The question, however, of what 
is fair, ethical, and accurate is one that is difficult to answer in many 
cases. Nevertheless, this should not be a reason to remove the rights of 
management (or, for that matter, of unions, political groups, or other 
agencies) to indoctrinate. 

To sum up, whether the education is intended to provide informa- 
tion or change the attitudes of employees ( even to the extent of indoc- 
trination or propagandizement) , the efforts of management are justified. 
But the premise of fairness, honesty, and ethical standards is assumed 
and must be protected. Without this, counterforce will be built up that 
will result in loss of faith, confidence, and loyalty. 

QUESTIONS AND PROBLEMS 

1. What is the relation between upward communication and downward com- 
munication? Which takes place first? 

2. How would you explain the fact that formal executive education for top- 
level groups is such a recent development? 

3. With what subject matter is top management education primarily con- 
cerned? 

4. Are there absolute answers to questions which top management poses for 
itself in its own educational programs? If not, isn't the future of labor- 
management relations to be viewed with pessimism? 

5. What is the task of education for the middle management group of execu- 
tives? 

6. Why is such significance generally attached to the role of the supervisor in 
labor-management relations? Do you think that, actually, the supervisor has 
as high a position in business as some would have us believe? Why, or why 
not? 



THE EDUCATIONAL PROGRAM 327 

7. What is the key factor in communications downward? What is it supposed 
to accomplish? 

8. What are the major topics included in communication programs? What are 
the major groups of conveyors used to transmit messages downward? 

9- Can you give examples of how knowledge of a company's history, objectives, 
or services has been of significance to a given employee? Was this knowledge 
used by himself or in relation to fellow workers, his family, or his friends? 

10. How would you proceed to tell employees about the finances and financing 
of a company? Are these matters really any of their business? 

11. Why is the "comic-book" type of conveyor of communications so effective? 
Does this necessarily imply anything about the mentality of the average 
worker? 

12. Some companies employ committees of workers to advise and counsel man- 
agement about content and conveyors of communications. What is your 
considered judgment of this practice? 

13. Why is there so much interest in such communications as those concerned 
with economics and the American system? Why doesn't industry concen- 
trate on the task of producing and distributing goods and services and leave 
such education to the schools? 

14. If you were to co-operate with community groups in developing and operat- 
ing an educational program for employees, to what agencies or groups might 
you turn? What subjects would you desire to have in such a co-operative 
educational program? 

15. What principles would be useful in organizing and conducting a program of 
communications ? 

16. What organizational units would usually be involved in a program of edu- 
cation and communications? 

17. For what reasons is it desirable to assign the leadership of an educational 
program to the personnel department? How must this responsibility be 
assigned to the personnel division so that it doesn't usurp "line" authority? 

18. How far should a company go in its educational program? Couldn't it overdo 
the education, thereby diverting executive time and effort which should be 
used in enhancing the company's efficiency and competitive position? 

19. What is the fundamental justification for an educational program? What is 
the fundamental basis upon which it should be built? 

20. To what extent, if any, should the co-operation of a union be sought in 
developing and operating a program of education and communications? 



CHAPTER 



17 



Remuneration Policies 



THE PROBLEM OF WAGES 

Scarcely any factor is as important in affecting labor relations as wages. 
Certainly, most of labor's openly expressed grievances are about wages. 
In part, this may stem from the fact that if his work is irritating, the 
worker sometimes expresses his discontent by complaining about wages. 
Then, too, labor sometimes complains because it feels that management 
is establishing unfair wage rates. Moreover, labor is continually re- 
minded of wages by the race between expenditures and the next payday. 
And each worker's standard of living is significantly affected by how 
much he earns, and, consequently, how he feels about his wages is also 
affected by what his neighbors think about his spending power. Thus 
labor's consciousness of its wages is constantly resharpened by the effect 
of its exertions, the rapidity with which the pay check is spent, and the 
evaluations placed upon it by friends and neighbors. 

AVAILABILITY OF MEASURING DEVICES 

Such sensitivity to wage levels is not necessarily undesirable. Indeed, 
all economic groups are sensitive about their economic affairs. The 
trouble, so far as wages are concerned, lies elsewhere. There does not 
exist a method of measuring wages that is above question. All existing 
methods have some elements of arbitrary calculation. In other words, we 
do not have a measuring device that will tell us exactly what any man is 
worth. 

In part, the explanation for the belief that wages can be set accu- 
rately derives from false deductions relative to the use of time-study 
methods. In this connection, one often hears the phrase that such meth- 
ods lead to the determination of a "fair day's pay for a fair day's work." 
Time-study methods are useful only in regard to the latter half of this 
phrase; they can be used to determine standards of output with a high 
degree of accuracy. But having established, for example, that on a given 
job a well-selected, trained, and experienced worker should be able to 

328 



REMUNERATION POLICIES 329 

produce 800 units a day, all that can be expected from time-study meth- 
ods has been derived. What the wage value of the 800 units is cannot be 
determined by time-study methods. To be sure, time-study analysts 
proceed from there to set value rates, but they are using other yardsticks 
or techniques in doing so, not time study. Since the time-study man does 
the rate setting, many incorrectly conclude that his slide rule also is 
capable of deriving economic values. 

The use of time-study methods is not criticized here but rather their 
misuse. To claim for them results that they cannot yield is a serious 
error, which is cited here as evidence of the belief held by many that 
unimpeachable wages can be set. If management is to make intelligent 
progress in its wage policies, it must convince others of its understand- 
ing of the complexity of the subject by refusing to take an unbending or 
narrow attitude toward it. Certainly, unions in many cases have become 
vigorous opponents of time-study methods because of misuse in setting 
rates. 

There are some reasonably accurate methods, but all have aspects 
that are subject to controversy. Hence, even granting that all employers 
are unimpeachably fair ( obviously, a far-fetched assumption, so long as 
employers are human beings ) , labor will be in a position to debate wage 
issues until the day when a "thermometer of wages" is developed that 
has the same degree of general acceptability as a precision thermometer 
for measuring temperature. 

This somewhat gloomy prospect is stated at the outset because it is 
highly desirable to recognize fundamental limitations in a subject of 
such significant consequences. There then is less likelihood of rushing 
glibly and unknowingly ahead with a wage program that can only lead 
to disaster. Many employers who have done this still cannot understand 
why their employees are dissatisfied with their well-intentioned wage 
policies. If they had really recognized the fact that it is impossible pre- 
cisely to calculate a "fair day's pay," the first step toward the develop- 
ment of a realistic wage policy would have been taken. For until this is 
openly admitted, so that employees can be convinced of the fundamental 
honesty of management, mutual self-respect and confidence, which are 
the foundation of a sound wage policy, cannot be laid. 

The absence of unassailable accuracy is admitted, not necessarily as 
a sign of weakness, but rather as a recognition of realistic limitations. As 
a result, the student will not be embroiled in useless and unending con- 
troversies. He can concentrate his attention upon the practical question 
of how available tools and principles can be made to work better to the 
greater satisfaction of all concerned. 



330 PERSONNEL MANAGEMENT 



THE CONFLICT OF INTERESTS 



Another source of trouble, which could be eliminated if measuring 
devices were accurate, arises from the somewhat conflicting interests of 
various groups who are affected by wages. Labor and management, to 
be sure, want as much as they can get out of their common and individ- 
ual endeavors. They must, however, recognize the interests of consum- 
ers, competing industries, and governmental agencies. 

Enough evidence has been made available since World War II, with- 
out digging into earlier history, of the tugging between various groups 
as a result of wage matters. For example, when employees in one in- 
dustry receive increases as a result of a strike for higher wages, other 
employees follow suit to keep in the parade and costs go up to con- 
sumers in general. As a consequence, labor, which is the largest member 
of the consumer group, sees its living costs go up and demands further 
wage increases; management resists, and the government steps in, trying 
to reconcile differences and to affect compensation, and so on in a never- 
ending vicious circle. 

Although all groups are members of the same economic and political 
systems and all sink or rise together, too often each acts as though its life 
alone were at stake. Here again the removal of a source of trouble awaits 
the time when all groups are able and willing to recognize, first, the 
interdependence of the members in the system and, second, the legiti- 
mate and reasonable interests of each other. 

SCOPE OF DISCUSSION 

The purpose of the next four chapters is to describe various aspects of 
the problem of remuneration. It is divided into the following parts: 



1. General wage issues and principles 

2. Job evaluation and wage classification systems 

3. Specific wage payment plans 

4. Job and wage stabilization plans 



The present chapter is devoted to a discussion of general wage issues 
and principles. It is divided into the following parts: 

1. Significant basic issues 

2. General theories of wages 

3. Legislative aspects and regulations 

4. Effect of union activities 

5. Wage measurement and policies 



REMUNERATION POLICIES 331 



BASIC ISSUES 



Before a plan of remuneration can be successfully developed, it is 
essential to understand clearly why employees are paid and the effect of 
long-time and short-time forces on wages. 

1. Factors of Remuneration. Employees are remunerated be- 
cause of the contributions which they make to their companies. By help- 
ing to produce goods and services that are sold to customers and patrons 
of the business, the wherewithal is received to compensate workers, as 
well as other co-operators in the business enterprise. But what happens 
when employees help to produce goods and services that cannot be sold 
profitably, or perhaps not at all? They nevertheless receive their wages 
and salaries, by legal priority above other creditors, if the business fails 
as a result of mistaken judgments regarding what and how much should 
be produced. 

Thus, to begin with, employees are paid for their efforts irrespective 
of their ultimate value or usefulness. Continuing to produce unsalable 
goods would, of course, lead to ultimate loss of pay opportunities 
through failure of the company. It is well to point out that this prefer- 
ence is not an inherent and irrevocable right of labor, but one which has 
been evolved through the years. What may be customary in years and 
ages to come is conjectural. The forces of custom, tradition, and change 
should be recognized, however, as important in setting wage patterns. 

More particularly, what are the efforts for which labor is paid? The 
following seem to be basic: 

1. Time spent at work 

2. Energy — physical, mental, and emotional 

3. Willingness to co-operate 

It might seem on the surface that time and exertion are the only 
factors in determining wages. Obviously, time is a factor, since produc- 
tive results take time. And results depend, too, upon application of 
various types of energy. But anyone who has worked or watched people 
work soon realizes that very often willingness to expend energy is per- 
haps the most important factor for which people are paid wages. 

2. Importance of Willingness to Co-operate. The proof of 
this is immediately seen in cases of method changes. Let us assume that 
energy can be expressed in units and that management improves job 
methods with the following results: 



332 PERSONNEL MANAGEMENT 



Output per hour 

Energy expended by labor 



Old 


New 


Method 


Method 


100 


200 


30 


20 



If the principle of cause and effect were invoked to support its claim, 
management presumably should be given credit for the increase in pro- 
duction. Indeed, to follow the argument to its logical end, wages should 
be decreased because labor is spending less energy in working and tak- 
ing no more time. 

But, in all likelihood, wages will have to be raised! And this despite 
the claim that management might make that it caused the increased out- 
put by devising the improved method. Labor would look, not at who 
caused the result, but at the result. Having noted that output has now 
been doubled, it would simply conclude that it should share in the in- 
crease and just as simply refuse to co-operate, were a share not forth- 
coming. 

The control that labor exercises in withholding its services reaches 
an extreme in the case of strikes, but "soldiering" on the job is often as 
destructive a form of unwillingness to expand energy. And yet the ex- 
penditures called for may actually be smaller, because of improved 
methods of doing the work! 

In short, willingness of workers to co-operate, as well as their time 
and energy, must be compensated. How to measure willingness is a 
difficult matter and is largely left to rule-of-thumb methods. For ex- 
ample, many time-study people follow the precept of Frederick Taylor 
that wages should be increased from 15 to 30 per cent when output is 
increased — even when it is doubled or tripled. The reason Taylor chose 
this figure is that he believed that larger increases at any one time spoil 
workers rather than stimulate them to greater effort. 

ABILITY TO PAY 

Another basic issue about which there is a great deal of confusion is 
the effect of long-time and short-time forces on wages. A pointed ex- 
ample is the controversy that often arises about the ability of industry 
to pay or not to pay wage increases demanded by labor. Many on the 
management side claim that ability to pay has nothing to do with wages. 
Apparently they are blind to the fact that productivity and wages practi- 
cally run parallel in American industrial history. Yet some companies 
are giving recognition to productivity by granting wage increases based 
on an "annual improvement" factor, which presumably measures the 
amount by which output per employee on the average has increased 
during each year. 



REMUNERATION POLICIES 333 

But those on labor's side who claim all for ability to pay fail to ex- 
plain why concerns that are losing money or actually failing do not pay 
their workers relatively less than their more prosperous fellows. 

1. Short-Run Forces. The answer to the riddle is simple. It lies 
in an understanding of short- and long-run influences on wages. In the 
short run, the economic influence on wages of ability to pay is practi- 
cally nil. All employers, irrespective of their profits or losses, must pay 
no less than their competitors and need pay no more if they wish to 
attract and keep workers. For example, if those who are operating un- 
profitably cut wages because of losses, they would soon find that their 
employees were leaving them, provided that other jobs were available. 

2. Long-Run Forces. In the long run, productivity is of vital in- 
fluence. When industry in general is able to pay high wages, individual 
producers who wish to take advantage of the tide of prosperity have to 
bid for labor to help carry on profitable operations. And the limit to 
their bidding, which, of course, they hope is not approached too closely, 
is their increased ability to pay. Conversely, when productivity falls 
generally, wages must be cut because funds are not available to do other- 
wise. 

3. The Individual Producer. The key to the difference between 
short-run and long-run influences is found mainly in the position of an 
individual producer as compared to that of industry in general. For ex- 
ample, when industry in general is prosperous, an employer who is 
losing money would soon lose his employees if he attempted to cut his 
wage rates. He cannot influence a downward trend in wages because 
his competitors are forcing wages upward. Conversely, when business 
is generally poor, an isolated producer who is making excessive profits 
would rarely raise wages because prevailing wage rates are sufficient to 
attract all the labor that he can use. His ability to pay has absolutely no 
influence on his wage rates. Of course, when most employers become 
more prosperous, they will begin to bid wages up. And they will do so, 
first, because they have to if they want to keep up in the parade and, 
second, because of their increased ability to pay. 

To sum up, a personnel manager must properly evaluate short-run 
influences and long-run influences if he is to help his company reach cor- 
rect wage decisions. Moreover, companies which foolishly raise argu- 
ments that apply in the short run but not in the long run, or vice versa, 
merely weaken themselves in the eyes of their employees when the truth 
is known. When economic forces are against him, the employer should 
be the first to admit it and not confuse the issue. This does not mean that 
he should not seek to protect his interests by legitimate means, but to do 



334 PERSONNEL MANAGEMENT 

so by ignorant claims is folly. The employees' confidence in the judg- 
ment of the employer is thereby lost. 

COST OF LIVING 

The relation of cost of living to wages is another basic question in 
establishing remuneration policies. Its significance has increased in the 
past several years because many companies have agreed to tie in wage 
increases (and decreases, too, in some instances) with changes in cost of 
living as reflected in cost-of-living indexes such as that compiled by the 
Bureau of Labor Statistics. For example, adjustments in wages are made 
monthly or quarterly as the index changes. How much of a wage ad- 
justment will be made depends upon the agreement between labor and 
management as to percentage of wage changes that is to be made for 
each percentage change in the cost-of-living index. 

Such practices seem to have a logical appeal. Yet analysis will show 
that cost of living has an indirect, not a direct, bearing upon wages. The 
reasonableness of cost-of-living "escalator clauses," as they are some- 
times called, lies in the fact that wages and cost of living tend to go up 
and down at the same time. For example, in the rising phase of a busi- 
ness cycle all prices tend to rise. Thus the items which labor buys go up 
in price. And wages of labor do, too. In the case of labor, its requests for 
increases are then met for the very simple reason that the supply of 
labor is relatively less than the demand for labor. The supply-demand 
relationship also favors increases in the goods that labor buys in its 
standard of living. 

Similarly on the down side of a business swing, the supply of labor 
tends to exceed the demand. Workers compete against one another for 
available jobs. The net result is a lowering of prices (wages for) of 
labor. 

The cost of living tends to go down likewise during the down side of 
a business swing. So any way one looks at it, the cost of living and 
wages seem to be related directly. And it is easy to conclude that one 
causes the other, particularly when one works for wages which are used 
to buy one's "cost of living." The relation is not, however, causal; each 
goes up or down because of general market and competitive conditions. 
It is like a cloud and a sail boat moving in the same direction. No one 
would say the cloud was pushing the sail boat. Rather the wind would 
be recognized as the causal factor in the case of cloud and boat. Similarly 
with wages and cost of living, the "wind" is the force of supply and de- 
mand. 

Since cost of living and wages tend to move together, it may be prac- 



REMUNERATION POLICIES 335 

tical to use the former as a measure of the latter. But this should be 
done with a clear statement that the cost-of-living indexes are an ex- 
pedient, not the real measure of wages. Otherwise, confusion and end- 
less debates will result. 

But even when used as expedients, the practice of tying wages to 
cost-of-living indexes eventually runs into one or more difficulties. In 
the first place, the tie between wages and living costs is usually made 
during periods of rising prices when employers are not reluctant to 
grant wage increases. But during deflationary periods, employees are 
irritated by the periodic (even though small) readjustments of wages 
that are made as living costs go down. Second, arguments eventually are 
raised as to how cost-of-living indexes should be computed. Also, there 
is much room for disagreement, as evidenced not long ago when the 
claims of various groups differed as much as 100 per cent in regard to 
how much costs had risen. Finally, a vicious circle would be induced if 
all employers followed this practice. Thus a price rise would call for a 
wage increase, which would increase costs, which would lead to an in- 
crease in prices, which would mean another wage adjustment, and so on. 

GENERAL THEORIES OF WAGES 
ECONOMIC ASPECTS 

In a world in which various groups have recourse so often to the use 
of force in gaining desired goals, the effect of economic principles often 
seems negligible. But sooner or later the millstones of economics grind 
out their truths to the disadvantage of those who did, as well as those 
who did not, obey its precepts. Hence the personnel manager should 
possess an understanding of the subject of economics so that he can 
explain the courses it dictates to management as well as labor. Although 
this is not the place to delve into detailed aspects of economic wage 
principles, some of the more important ones will be touched upon. 

1. Wages as a Price. Without forgetting the human aspects of 
labor, it is nevertheless necessary at the outset to recognize that the term 
"wage" is a particular kind of price, that is, the price of labor. As such, 
it is subject to the same type of analysis as any other price. Assuming, 
for the moment, the absence of political regulations and pressure groups 
(either managerial or labor) , wages are set at the point where the de- 
mand curve for labor crosses the supply curve of labor. 1 Hence, to act 



1 This oversimplified statement has the merit of making it possible to discuss, in a 
limited space, a topic that otherwise would have to be left untouched here. 



336 PERSONNEL MANAGEMENT 

rationally in setting wage policies, it is necessary to determine the curves 
for demand for and supply of labor. 

Although this is extremely difficult, if not impossible in most cases, 
nevertheless an understanding of the theory of demand-and-supply de- 
termination is very useful. At least, the personnel manager who studies 
the forces behind demand and supply can make more intelligent sug- 
gestions to management than one who relies upon intuition or guess- 
work. 

2. Demand Curve. The demand for labor (to begin with this 
factor) has two major aspects. First, each company has a demand for 
labor, that is, the quantities of labor that it is willing to hire at varying 
prices. Ordinarily, these quantities go downward, as indicated in Figure 
67. The downward trend is due to the decrease in productivity of any 

FIGURE 67 




NUMBER OF WORKERS 



group of workers, as explained by the general principle of diminishing 
productivity. Every company should be able to produce a reasonably 
accurate chart of its labor requirements, or demand curve, at any given 
time. Second, for every company there usually is a community or in- 
dustry demand curve, depending upon the number and type of competi- 
tors for labor in the area in which a company is operating. This type of 
demand curve is difficult to produce exactly, but it, too, has a down- 
ward trend, as depicted in Figure 67. A simple way of doing this is to 
estimate the types and quantities of labor that all users of labor require 
at different rates of output. 

3. Supply Curve. The supply curve, on the other hand, has an 
upward trend, as indicated in Figure 67. This is a recognition of the fact 
that, ordinarily, it takes increasing quantities of dollars to lure larger 
numbers of labor into the working market. Here, again, there are com- 
pany and area supply curves. Most companies have a supply of labor 
that is loyal to it irrespective of general wages or competition. And then 
there is a general supply curve representing quantities that can be drawn 
upon or lost by a particular company, depending upon the wages it is 



REMUNERATION POLICIES 337 

willing to pay. Supply curves are difficult to draw, although here, too, 
more or less accurate estimates can be made by counting the population 
by sex and age groups and by getting estimates of types of skills avail- 
able in the community. Much work of this nature was done by the War 
Manpower Commission during World War II in discharging its re- 
sponsibilities of channeling labor to high-priority industries. 

4. Forces Affecting Demand and Supply. Besides having a 
good picture of the demand-and-supply curves at any particular time, it 
is essential to determine and weigh as accurately at possible the forces at 
work that may change the existing demand-and-supply curves. In brief, 
the following are forces for which signs should be watched : 

1. Demand factors 

a) Short-run 

( 1 ) Changes in company production schedules 

(2) Changes in competitors' production schedules 

(3) Seasonal production changes 

(4) Changes in consumer demands 

b ) Long-run 

( 1 ) Changes in fundamental processes of production 

( 2 ) Changes in demands of competitors for labor 

( 3 ) Changes in fundamental productivity of labor 

(4) Growth or decline of industry 

( 5 ) Profitability of the industry 

2. Supply factors 

a) Short-run 

( 1 ) Mobility of labor in or out of the community 

(2) Seasonal changes in working habits 

( 3 ) Union demands 

b ) Long-run 

( 1 ) Cyclical depressions or periods of prosperity 

( 2 ) Influx of new industries or departure of old 

( 3 ) Changes in family size and other population characteristics 

(4) Changes in costs and standards of living 

( 5 ) Trends in union strength and governmental regulation 

Close study of such factors as the foregoing will enable any em- 
ployer to draw more accurate conclusions about the demand and sup- 
ply of labor. With such information, he can determine what changes, if 
any, he should be prepared to make in wages. He will certainly not 
make the mistake of foolishly agreeing to wage changes in direct pro- 
portion to such things as changes in cost of living. Instead, he will at- 
tempt to interpret their effect upon the supply of labor and in turn its 
relation to his price curve. Also, he will recognize that his demand for 
labor is a derived demand based, in the final analysis, upon the demand 



338 PERSONNEL MANAGEMENT . 

for his product. When his sales curve is falling (or rising) , changes will 
have to be made in the labor payroll, but not necessarily in the same 
proportion. Hence he should be prepared to calculate what changes in 
his demand curve (wages) should be made as a result of changes in 
production schedules, in production processes and productivity, and in 
the profitability of the business. 

LEGISLATIVE REGULATIONS 

Economic forces rarely have an opportunity to work themselves out 
free from the influence of the foregoing factors. For example, in recent 
years there has been a growing tendency for governmental regulation of 
wages. Of significance in this respect are the following: 

1. Minimum wage controls 

2. Wage and salary stabilization rules of war and postwar years 

3. Collective bargaining regulations 

MINIMUM WAGE CONTROLS 

Minimum wage controls are enforced by federal and, in some cases, 
state regulations. The state regulations follow federal plans, so the latter 
only are discussed here. The Fair Labor Standards Act, the Walsh- 
Healey Act, and the Bacon-Davis Act are the federal controls. 

THE FAIR LABOR STANDARDS ACT 

The Wages and Hours Law was enacted in 1938 and amended in 
1949 for the dual purpose of helping to spread employment and to out- 
law unsatisfactory wage rates. The latter purpose is accomplished by 
establishing a minimum pay level of 75 cents an hour. The former pur- 
pose is achieved by penalizing employers who work their employees be- 
yond 40 hours a week by requiring them to pay 50 per cent more for 
the excess hours. This is where the term "time and one-half for over- 
time" is derived, the actual overtime being paid for at the rate of one 
and one-half times the regular base rate. For example, an employee who 
works 48 hours in a given week in an industry subject to the F.L.S.A. 
and whose base rate is $1.00 per hour would be paid $12.00 for the 
extra 8 hours of work, or a total for the week of $52.00. This may be 
computed by two methods, as follows : 

Let: 

Regular work week of 40 hours = R 
Overtime hours = O 

Total hours worked = T 

Base rate = B 

Wages = W 



or 



or 



REMUNERATION POLICIES 339 

Then, according to the first method: 

(txb) + (0 xb) y 2 = W 

(48X$1) + (8X|1) % = $52. 
According to the second method: 

(rxb) + (o xb) iy 2 = W 

(40 X $1) + (8 X $1) 1% = $52. 



Some companies prefer the first of these methods because it shows 
.the total hours worked and the overtime hours, whereas others prefer 
the second because it shows the extra amount paid for overtime and 
hence the need for keeping it at a minimum. 

1. Coverage of the Act. The F.L.S. A. covers all businesses and 
employees, with stated exceptions to be noted later, who engage in inter- 
state commerce or who produce goods that enter interstate commerce. 
While the Act defines "interstate commerce" in broad terms, in test 
cases the courts have defined it so stringently that any business which is 
not strictly intrastate should be prepared to follow its provisions. Thus 
companies that ship only a small percentage of their goods across state 
lines have been judged to be affected by the law. If only a small per- 
centage of one's business is interstate, let us say anywhere up to 10 per 
cent, it is highly desirable, if possible, to segregate employees working 
on interstate business, since the others may then be legally excluded 
from the provisions of the law. 

2. Exclusions under the Act. There are three classes of ex- 
clusions under the Act. First, completely exempt are the following: 

1. Strictly intrastate activities 

2. Retail or service activities which are at least 75 per cent retail or service 
and at least 50 per cent intrastate 

3. Transportation employees (covered by another federal law) 

4. Agricultural and fishing employees 

5. Executive, administrative, and professional employees 

Second, exempt from overtime requirements for specific periods are the 
following: 

1. The first processing of various agricultural and livestock products for the 
first fourteen weeks of a seasonal period 

2. Any seasonal industry, if specified as such by the administrator of the act, 
and then for fourteen weeks only 

3. Employees under certain types of work guarantees and as specified in a 
union contract 



340 PERSONNEL MANAGEMENT ■ 

Third, exempt for limited periods from the minimum wage provisions 
are apprentices, learners, handicapped workers, and messengers. 

3. Employee Exemptions. It is important under this Act, and 
the Walsh-Healey Act, too, that the coverage of the term "employee" be 
clearly understood. Generally speaking, an employee is one who is sub- 
ject to the directions of an employer or his managerial representatives 
regarding what is to be done and how. Having the right to discharge 
also serves to separate employers from employees. More specifically, 
owners, executives, and independent contractors are examples of those 
considered to be employers. Of particular interest here are the tests by 
which it is determined whether or not particular employees may be in- 
cluded in the following exempt groups: executives, administrative em- 
ployees, professional employees, certain sales employees, and a miscel- 
laneous group. 

a) Executive Exemptions. In general, the nature of the work and 
the salary received determine executive exemptions. More specifically, 
an executive is considered to be one whose primary duty consists of 
managing an establishment or a recognized department or subdivision 
thereof. He must also customarily direct the work of others ( at least two 
subordinates), have authority to fire or recommend discharge or pro- 
motions, and exercise discretionary powers. He must devote not more 
than 20 per cent of his hours worked to performance of duties not re- 
lated to managerial duties. And he must be compensated (exclusive of 
board, lodging, or other facilities) at a rate of not less than $55 a 
week. 

If the executive in question receives at least $100 a week and meets 
all other requirements except the 20 per cent rule, he shall also be 
deemed to be an exempt executive. 

b) Administrative Exemptions. Administrative exemptions are 
also related to nature of work and salary received. Exemptions are 
granted to those who perform office or nonmanual work that is con- 
cerned with management policies or general business operations. The 
work must require exercise of discretion and independent judgment, be 
of a specialized or technical nature, and be performed only under gen- 
eral supervision. Not more than 20 per cent of the time must be spent on 
tasks not related to administrative work as defined. And the salary re- 
ceived (exclusive of board, lodging, etc.) must not be less than $75 a 
week. 

If the administrative employee receives at least $100 a week and 
meets all other requirements except the 20 per cent rule, he shall also be 
deemed to be an exempt employee. 



REMUNERATION POLICIES 341 

c) Professional Exemptions. The professional tests are similar to 
those of the administrative employee in respect to the $75 minimum 
salary under a 20 per cent rule, or $100 a week without this rule. Defi- 
nitions of duties are, of course, different. A professional employee is one 
who performs intellectual and varied duties as opposed to routine, man- 
ual, or physical work. He must exercise discretion and judgment. His 
education must have been in a field of science of learning customarily 
acquired by a prolonged course in specialized and intellectual study, as 
distinguished from general academic training, apprenticeships, or trade 
courses. Or the work may be in a recognized artistic endeavor depend- 
ent upon invention, imagination, or talent as opposed again to work 
calling for general, manual, or broad training and ability. 

d) Sales Exemptions. In addition to retail exemptions noted ear- 
lier, "outside" salesmen may also be exempted. Such salesmen must, to 
begin with, make personal calls at the customer's place of business. Mail 
or telephone sales are not exempt unless they are an adjunct of the per- 
sonal call. And not more than 20 per cent of the time must be spent on 
such activities as clerical work, attending sales conferences, making in- 
cidental deliveries or collections, and traveling. 

e) Miscellaneous Groups. As noted earlier, apprentices, learners, 
handicapped workers, and messengers are the principal classes eligible 
for exemption from minimum wage provisions. 

For apprentices to be exempted, their training agreement must be 
in writing and it must cover the following points: 

1. Provide for not less than 4,000 hours of reasonably continuous employ- 
ment 

2. Provide for participation in an approved schedule of work and at least 
144 hours per year of related supplemental instruction 

3. Set forth the proportion between the number of apprentices and the num- 
ber of experienced workmen in a given job classification 

4. Specify the relation of apprentice rates at various periods to the rates paid 
experienced workers 

5. Be approved by the State Apprenticeship Council or other established 
state authority, if state authority exists > 

In the case of handicapped workers, learners, and messengers, sub- 
minimum wage rates may also be paid. This cannot be done, however, 
until certificates of exemption noting the specific reductions permissible 
are obtained from the federal agencies. 

4. Contractual Exemptions. Under certain types of collective 
bargaining agreements, exemptions are permitted. Under the Belo-type 
contract — named after the case in which this clause was legalized — the 



342 PERSONNEL MANAGEMENT 

employer need not comply with overtime requirements. However, he 
must guarantee a certain sum each week, no matter how many hours 
worked. 

Such agreements have further conditions. No employee shall be em- 
ployed more than 1,040 hours during any consecutive 26-week period, 
or more than 2,080 hours in 52 weeks. In any event, hours over 12 a 
day, or 56 a week, are entitled to the overtime pay provisions. 

5. Computing Overtime. The next major problem in connec- 
tion with this Act is that of computing overtime. In order to describe 
various phases of this problem, the following are now discussed: 

a) Computing time and rates 

b) Overtime calculations for hourly employees 

c) Overtime calculations for nonhourly employees 

d) Effect of bonuses 

e) Time-off plans 

/) Overtime on overtime 

a) Computing Time and Rates. In computing how many hours an 
employee has worked, the general rule is that compensable time is that 
during which an employee works or remains on duty, and which is di- 
rectly related to his major activity. 2 By custom, tradition, or contractual 
agreement, other activities related to normal work duties may also be 
included. 

Having computed the hours worked during a given week, the next 
step is to determine the rate to be used for overtime purposes. Normally 
included are, first, all regular earnings and, second, any bonuses or in- 
centive pay directly geared to services rendered. Normally excluded are, 
first, pay for periods not worked, such as holidays and vacations, and, 
second, extra pay for periods outside of regular hourly work or bonuses 
not directly related to individual work effort. 

b) Overtime Calculations for Hourly Employees. Overtime calcu- 
lations for hourly employees vary. For those on an hourly basis com- 
pletely, the calculations are simple. Thus an employee who worked 50 
hours in a given week and is paid $1.00 an hour would have his pay 
figured as follows: 50 hours X $1.00 = $50.00, plus V 2 of $1.00 X 10 
hours overtime $5.00, or a total of $55.00. 

For pieceworkers the calculation would differ. Suppose an employee 
receives $0.10 for each unit produced. During a given week of 50 hours, 
he produces 600 units. His base rate would be (600 X $0.10) -f- 50 
hours, or $1.20. To his piecework earnings of $60.00 would be added 

2 This has been clearly established under the provisions of the Portal-to-Portal Pay Act 
of 1947, as incorporated in the 1949 revisions of the F.L.S.A. 



REMUNERATION POLICIES 343 

$1.20 X 10 hours X V2, or $6.00, making a total of $66.00 for the 
week. 

An employee who works on hourly rates and piece rates during a 
given week would have his pay calculated differently. Assume that an 
employee worked 50 hours in a given week. Of these, 20 hours were 
paid on an hourly basis of $1.00, and during 30 hours he was on piece- 
work. The piece-rate earnings came to $40.00. His regular earnings 
therefore amount to $60.00. This amount when divided by 50 hours 
gives his base rate of $1.20. For the 10 overtime hours, he would there- 
fore receive 10 X $1.20 X V2, or $6.00, which when added to his reg- 
ular earnings yields a total of $66.00 for the week in question. 

c) Calculations for Nonhourly Employees. For employees on 
weekly, semimonthly, or annual bases, the overtime calculations are 
made in weekly rates. Hence the nonweekly rates must first be converted 
to a weekly basis. This is done by converting to an annual base first, then 
dividing by 52. 

When such employees are paid a flat salary for a regular number of 
hours each week, the fixed hours must be divided into the weekly salary 
to get the base rate. All overtime hours must then be paid at one and 
one-half times that rate. Any other forms of compensation, such as 
bonuses or commissions, must first be added to the weekly salary before 
it is divided by the fixed number of hours. 

For employees paid a fixed salary regardless of the number of hours 
worked in the week, the base rate is obtained by dividing the fixed 
weekly salary by the number of hours actually worked in the week. 
Then all overtime hours are paid at one and one-half times the calcu- 
lated base rate. Again, any extra bonuses which depend upon service 
rendered must be first added to the fixed weekly salary before calcu- 
lating the base rate. 

d) Effect of Bonuses. Of interest also are bonuses dependent upon 
production but not paid until some period subsequent to that in which 
it is earned. In such cases, original overtime payments must be based on 
earnings exclusive of the bonus. Then when the bonus is distributed, ad- 
ditional overtime must be paid by recomputing for the earlier period the 
effect which the bonus would have had upon the base rate. 

Where employees are paid either a salary plus commissions or 
straight commissions, all commission earnings must be counted in com- 
puting overtime pay. 

e) Time-Off Plans. Of further interest is the time-off plan of com- 
pensating employees for overtime. In such instances, employees must 
be given an hour and a half off for each hour of overtime. However, the 



344 PERSONNEL MANAGEMENT 

employee must be guaranteed a fixed sum for a definite number of hours 
and must work a regular number of hours to earn that salary. And the 
amount due the employee for overtime earned in one week within a pay 
period must be compensated by being given time off in another week of 
the same pay period. 

/) Overtime on Overtime. Because the Wages and Hours Law as 
originally passed was not clear on the matter, some employees whose 
union contracts called for time and one-half or double time on Satur- 
days, Sundays, and holidays, irrespective of previous hours worked dur- 
ing the week, claimed that double-time earnings should be averaged in 
with regular earnings to ascertain the base rate for overtime purposes. 
This would result in "overtime on overtime," and an affirmative deci- 
sion was reached in the Bay Ridge Stevedoring Case in 1948. But the 
ruling had many unfavorable effects, so an amendment to the Wages 
and Hours Law was passed in 1949. This provides, first, that an em- 
ployer may pay premium rates for work done outside of regular hours 
without adding the premium to regular rates to arrive at the overtime 
base rate. Moreover, the law provides that the premium rates may be 
credited toward overtime compensation due under the Wages and 
Hours Act. Thus an employee who receives double time for Sunday 
work would have the overtime requirements satisfied if he worked 48 
hours in a given week in which 8 hours were worked on Sunday. 

6. Records. Although the F.L.S.A. does not require that specific 
forms of records be kept, rulings of the Administrator indicate that cer- 
tain types of information should be recorded. First, for each employee 
such personal data should be kept as name, address, date of birth if 
under nineteen, and occupation. Second, time records should be kept re- 
garding the standard work week, hours worked each day and each week, 
and absences. Third, payroll records should cover dates of payment, pay 
periods, daily and weekly earnings, basis on which payment is made, 
bonuses earned, and any deductions from wages paid. And, fourth, if 
the company hires employees who work at home, detailed records 
should be kept on the foregoing, as well as the amount of work distrib- 
uted to and collected from each such worker. 

7. Penalties. Employers who violate this Act may be punished in 
a variety of ways. By injunction, an employer may be forbidden to ship 
goods interstate, to pay less than minimum wages, or to keep inadequate 
records. By criminal prosecution, if an employer is convicted of having 
willfully violated the Act, he can be fined up to $10,000 or imprisoned 
for a term of not more than six months, or both. And if an employee has 
not been paid his due under the law, he may sue to recover the wages 



REMUNERATION POLICIES 345 

due plus double the sum as liquidated damages plus attorney fees and 
litigation costs. It is not necessary that the employer's failure to pay be 
willful. 

THE WALSH-HEALEY ACT 

The Walsh-Healey Act differs from the F.L.S.A. in two important 
respects. First, the overtime provisions are set on a daily basis, begin- 
ning after eight hours of work. Second, the minimum wages are based 
upon prevailing community rates, as determined by the Secretary of 
Labor after public hearings. 

1. Coverage under the Act. The matter of coverage is also im- 
portant under this Act. In general terms, it covers those parts of an 
employer's business which come into contact with federal contracts of 
$10,000 or more. For example, the following firms would be covered — 

1. Those dealing with any federal agency 

2. Those that supply or manufacture contracted articles 

3. Those that accept subcontracts from the prime contractor with a federal 
agency, or work with him in the execution of a contract 

4. Those that ship goods on behalf of a regular dealer 

The more important exemptions include the following: 

1. Various transportation and communication facilities 

2. Construction contracts 

3. Personal service contracts 

4. Perishable commodities 

5. Stock on hand 

The definitions of employees under this Act are much like those of 
the F.L.S.A. The following are the principal exemptions: 

1. Employees not engaged in work directly connected with the manufactur- 
ing, fabrication, assembling, handling, or shipment of articles, supplies, 
and equipment 

2. Office, custodial, and maintenance employees 

3. Executive, administrative, and professional employees 

2. Methods of Computation. Methods of computing time and 
pay for overtime are much the same for the Walsh-Healey Act as for the 
F.L.S.A., except that the day instead of the week must be used in com- 
puting overtime. The basic work period is eight hours, and the mini- 
mum rate used in computing overtime must be at least the prevailing 
rates in the community for comparable types of work. 

Whereas an employee who worked 36 hours during a given week, 
but .did so in 3 days of 12 hours each, would receive no overtime under 



346 PERSONNEL MANAGEMENT 

the F.L.S.A., he would under the Walsh-Healey Act. If his rate were 
$1.00 an hour, his pay for each day would be $14.00, calculated as 
follows: 

8 hours at $1.00 $ 8.00 

4 hours at $1.50 6.00 

Total $14.00 

If he were on piecework or a bonus plan, the extra earnings would have 
to be included when determining the rate to be used for overtime pur- 
poses. 

3. Required Records. The records required by this Act are much 
the same as by the F.L.S.A. The Walsh-Healey regulations require the 
same personal data as the Wages and Hours Law plus these two ad- 
ditional items: 

1. The sex of each employee 

2. The number of each contract each employee works on, and the dates when 
the work is performed 

Except for the overtime column, payroll records under both the 
Wages and Hours and the Walsh-Healey Acts may be identical. The 
reason for the exception is that the Wages and Hours Law requires 
overtime pay only for hours worked over forty per week, whereas the 
Walsh-Healey Act requires overtime pay for hours worked over eight 
per day or forty per week, whichever is greater. 

Beginning May 1, 1943, firms covered by the Walsh-Healey Act had 
to keep a record of the "injury frequency rate" in their establishment on 
a quarterly basis. This information was to be tabulated on January 1, 
April 1, July 1, and October 1 of every year. The injury frequency rate 
is calculated by multiplying the total number of "disabling injuries" 
which occur during each three-month period by one million and divid- 
ing that sum by the total number of man-hours actually worked within 
the same quarterly period. 

A "disabling injury" is one which prevents an employee from con- 
tinuing to work beyond the day or shift on which the injury occurred. 
All employees in an establishment must be counted in figuring the total 
number of man-hours worked, even though they may not be subject to 
the Walsh-Healey Act. 

4. Penalties for Violations. The penalties for violations of 
this Act may be very severe. They are as follows: 

1. Money damages for child or prison labor 

2. Wage restitutions 

3. Cancellation of contract 

4. Blacklisting 



REMUNERATION POLICIES 347 

Perhaps the most effective method of enforcing the Walsh-Healey 
Act is that which provides for the assessment of money damages against 
the contractor. 

If the contractor violates the minimum wage or overtime stipulations, 
he has to pay the wages due, equal to the amount of any unlawful de- 
ductions, rebates, refunds, or underpayments. 

Failure to comply with the stipulations of the Walsh-Healey Act, 
which are a part of the contract, constitutes breach of contract by the 
contractor. As in other instances of breach of contract, the penalty is 
cancellation of the contract. In addition, he can be made to pay any in- 
creased costs if the government gets someone else to complete the con- 
tract. 

The Comptroller General is required to distribute a "blacklist" to all 
government agencies. The persons or firms whose names appear on this 
list cannot be awarded any government contract for a period of three 
years following the date upon which the Secretary of Labor determines 
that a breach occurred, unless the Secretary recommends otherwise. 
Obviously, to be placed upon this list would be a serious penalty in 
many cases. 

THE BACON-DAVIS ACT 

The Bacon-Davis Act is similar to the Walsh-Healey Act, since it, 
too, regulates minimum wages on governmental contracts. It relates to 
contracts in excess of $2,000 for the construction, alteration, and repair 
of public works. All mechanics and laborers must be paid at least the 
prevailing rate as established by the Secretary of Labor. 

If contractors pay more than prevailing rates, they do so at their own 
risks, since such additional costs are not reimbursable. If contractors pay 
less, they are subject to any of the following penalties: 

1. The Secretary of Labor may withhold accrued payments due to the con- 
tractor from the federal government. 

2. The contracts held by the contractor may be canceled outright by the gov- 
ernment. 

3. The contractor's name may be placed upon the Comptroller General's in- 
eligibility list for further contracts. 

COLLECTIVE BARGAINING EFFECTS 

The collective bargaining regulations of the federal government are 
also of serious consequences in the matter of wages because they affect 
the weight which employers and employees can bring to bear in the 
bargaining processes. Since this subject is discussed in detail in later 



348 PERSONNEL MANAGEMENT 

chapters, it is merely cited here as an important factor in wage deter- 
mination. Certainly, in many ways the Taft-Hartley Act and its prede- 
cessor, the National Labor Relations Act, have in recent years been the 
most important factor, the influences of World War II excepted, in 
wage disputes. 

EFFECTS OF UNION ACTIVITIES 

The strength and principles which labor unions have brought to the 
labor market are also of significance in determining wages and wage 
policies. Anyone who has bargained with labor individually and then 
collectively, through its representative, is soon made aware of the differ- 
ence in bargaining practices and theories. Indeed, the force and direction 
of union demands are so new and novel to many, that unions have been 
viewed by some, not as an economic institution, but rather as a political 
mechanism. Certainly, the efforts of some labor leaders to perpetuate 
themselves in office, to retain disproved economic theories because of 
their apparent appeal to workers, and to participate actively in the elec- 
tion of governmental officials, lend support to those views. 

1. Learning Organized Labor's Views. From the standpoint 
of good personnel management, however, it is foolish to call names or 
condemn practices regarding which contrary opinions are held. But it 
is wise to know the views of labor (as it does those of management), 
to ascertain the policies of labor, to learn the strength and direction of 
its activities, and to interpret its aims so that management can react 
intelligently and fairly thereto. For example, the desire of some em- 
ployers to break unions may be commendable in theory for them, but 
it is unrealistic in practice. Instead of fighting them, it would be far 
better to exert their energies in disseminating facts and information, 
which in the long run would be more effective in combating undesirable 
practices and in building a better relationship between labor and man- 
agement. > 

2. The Lump-of-Work Theory. The wage policies of unions 
are, of course, many and varied. The purpose here is merely to de- 
scribe briefly some of the more important of them. To begin with, some 
of its wage policies are obviously unsound, but they have been retained 
so long in some instances that their effect may take years to disappear. 
First, there is the principle that workers should take it easy on their 
jobs because to do otherwise will result in working themselves out of 
their jobs. This is the lump-of-work theory, which is false, yet has an 
apparent and occasional accuracy, as anyone will agree who has seen 



REMUNERATION POLICIES 349 

the well of orders dry up, and jobs with it. Yet "soldiering" and prac- 
ticed restriction of output as a means of keeping up wages, as a general 
proposition, can lead to one result — decreased employment because of 
higher labor costs and a consequent decrease in sales. 

3. The Equality of Workers Theory. There is encountered 
occasionally the principle that all workers are economically equal on 
given types of jobs (presumably because they are born politically 
equal). A common application of this principle is that of paying all 
workers on a given class of work the same rate, irrespective of individual 
merit. Its application is desirable for the union because it eliminates the 
troublesome controversies between workers of varying ability as to the 
rates they should receive. The union can then concentrate its attention 
upon other matters than that of reconciling intra-union differences. 
Such supposed equality is the basis of seniority rules for granting wage 
increases which otherwise have little validity. 

4. Union Strategies. Other attitudes of unions toward wage 
matters are more realistic. For example, wage demands are used as an 
effective tool of bargaining. It is important to recognize that union 
strategy may call for asking for more money than they expect to get, 
by putting out a wage demand in order to get something else, or by 
placing wages last on a list of demands so that management in its eager- 
ness to get to wage questions may be more lenient on other demands. 
Of course, management may counter with proposals that tend to offset 
the strategy of labor, but to do this, it must be aware of the extent to 
which labor is using wages as a bargaining tool. When labor in a given 
case asks for a 30 per cent increase in wages, what does it really want? 
Until an answer is attempted, management cannot intelligently set its 
counterproposals at the most advantageous point. 

Wages are used by unions to control or affect their internal affairs as 
well as relations with employers. For example, wage rates have been 
bargained for that will retard the flow of learners into a trade. In ad- 
dition, levels of wages between different grades of work are often closely 
watched so that members do not quarrel among themselves over relative 
wages. In some instances, wage adjustments have been sought to offset 
the introduction of laborsaving equipment. And most unions nowadays 
estimate closely the possible effect upon employment of the levels of 
wage increases they seek. 

The foregoing is sufficient for present purposes to illustrate the vari- 
ous ways in which unions use wages in collective bargaining and with 
which management must be prepared to deal. It should not be con- 
cluded that management and labor are inevitably doomed to warfare 



350 PERSONNEL MANAGEMENT 

because of past and present conflicts over wages. Of course, many 
"battles" will continue to be fought. But when management can an- 
ticipate the demands, and reasons therefor, of unions, it can prepare 
facts to buttress its counterproposals and arguments. Through informa- 
tion, and not name calling, will progress toward better relations evolve 
because only bigots can close their eyes to the truth. And there is good 
reason to believe that both management and labor have in their ranks 
leaders who more and more are seeking facts to fight their battles and 
less and less are desirous of relying upon shows of brute strength. 

SUMMARY REMARKS 

In the light of the various forces at work in the field of wages, what 
should be management's policy toward wage determination? To begin 
with, it should be perfectly obvious that anyone who is convinced that 
he has a perfect answer to wage problems and can correctly set wages 
is merely deluding himself. There is, as yet, no method of such perfec- 
tion available. To believe so merely establishes a block in the road that 
otherwise leads to intelligent compromise. 

Next, management's wage policies should be based upon a full ac- 
count of all factors — economic, legal, union, and social — that have 
some effect on wages. To do this, it is absolutely essential to determine 
as precisely as possible how these factors exert their influence. Such 
factors as cost-of-living indexes, union demands, changes in population 
structure, competition, and federal regulations all have their place in 
the wage structure. However, some work directly and others indirectly, 
some work slowly and others rapidly, and some are positive in wage 
determinations and others negative. Unless the direction and force of the 
composite of factors is determined, grievous errors will be committed 
in establishing wage policies. 

Finally, and perhaps most important of all, wage policies should be 
viewed as an integral part of the structure of a personnel program. 
Wages are undoubtedly the keystone to the arch of this structure, but 
not the structure itself, as some employers seem to believe. Indeed, some 
have been so preoccupied with wages that unions have taken advantage 
of this bias to gain unwarranted and ill-advised concessions on working 
conditions and rules. The ill-advised seniority rules accepted by some 
companies, which they must follow thereafter to their regret, are a case 
in point. 

When wages are given their proper place in the personnel program, 
they are neither overemphasized nor underemphasized. Wages alone 
cannot bring about higher production, better morale, and better rela- 



REMUNERATION POLICIES 351 

tions with employees. Nonfinancial incentives, proper handling of 
grievances, good working conditions, availability of various services, 
and development of confidence in workers are examples of other matters 
that can add to or detract from the efficiency of the wage program itself. 

QUESTIONS AND PROBLEMS 

1. An employee working for a company operating under the Walsh-Healey 
Act is scheduled to work on a given day from 8:00 A.M. to 4:45 P.M., with 
a half hour off for lunch. He works the scheduled time, except that he comes 
in two minutes late, for which tardiness he is penalized a standard fifteen 
minutes. His hourly rate is $1.60. How much should he be paid for the day 
in question? 

2. If an employee received a production bonus at the end of the year, cover- 
ing work done during the entire past year, would it be necessary to go back 
through each week of the year and recompute overtime earnings? Doesn't 
this place a heavy burden upon the businessman? What is the justification 
for this? 

3. What do you think of the proposition of paying people according to their 
contributions plus their needs? According to physical units of production 
as a measure of dollar wages? Explain. 

4. Can wages be measured precisely? If they cannot, what hope is there of ever 
minimizing wage disputes? 

5. Assume that two manufacturers in the same line of business, of the same 
size, in the same community, and employing the same kinds of labor in the 
same amounts report the following data: 

Results for Prospects for 

Current Year Next Year 

Company A $1,500,000 (profit) $ 250,000 (loss) 

Company B 500,000 (loss) 1,000,000 (profit) 

What effect should these data have upon wages in the individual companies? 

6. Upon what theory are such employees as supervisors and professional em- 
ployees exempted from the provisions of the F.L.S.A.? 

7. Does your state have a state wages and hours law? If so, how do its provi- 
sions differ, if at all, from those of the federal acts? Why may state laws be 
necessary in addition to the federal laws? 

8. Illustrate the ways in which overtime pay would be computed for an office 
employee who had worked the following hours, and whose weekly rate for 
a forty-hour week is $48.00: 

1st week 43 

2d week 47 

3d week 32 

4th week 36 



9. What is the relation of ability to pay to wage rates 



352 



PERSONNEL MANAGEMENT 



10. Should wages be adjusted directly as cost of living changes? Why or why 



not: 



11. If a company wishes to make wage adjustments in line with changes in cost 
of living, what suggestions would you make to it and against what pitfalls 
would you provide safeguards? 

12. What is the purpose of minimum wage laws? What are their presumed 
benefits? In what ways are they likely to be harmful to labor? 

13. In what respect does the Walsh-Healey Act differ from the F.L.S.A. in regard 
to minimum wages? 

14. Would you ascribe the strength of unions in wage matters to their convinc- 
ing explanation of economics, to their political power, or to their bargain- 
ing power in the industrial field? If you select their political or bargaining 
power as the explanation, is it not true that these bases of power are short 
run rather than fundamental? 

15. What can time-study methods contribute to the determination of wages? 
What should not be expected of such methods? 

16. What is meant by "absolute wages," and what by "relative wages"? Why 
must both be given consideration in setting wages? 

17. What is the difference between "money wages" and "real wages"? Show how 
each may be measured. 

18. What is meant by "take home" wages? With what may these be compared? 
19- Some companies have established the rule that employees are not to discuss 

wages or wage rates with each other. Explain why you do or do not believe 
the policy is good. 
20. A wage earner in a company operating in interstate commerce has a basic 
wage rate of $1.10 an hour. On a particular day his time ticket reads as fol- 
lows: 



Hours 


Job 


Rate 


Units 
Produced 


8:00-10:00 


Piecework 


$0.03 


84 


10:00-10:30 


Daywork 






10:30-12:30 


Piecework 


0.07 


31 


Lunch 








12:45- 3:00 


Daywork 






3:00- 5:00 


Piecework 


0.10 


24 



How much is his wage for the day in question: 



CHAPTER 

Job Evaluation 



18 



and Wage Classification 



INTRODUCTION 



As noted earlier, relative wages perhaps even more than absolute wages 
are of significance in affecting employee morale and effort. It is surpris- 
ing to see the change in an employee who, seemingly satisfied with his 
wage, learns of the higher earnings of a fellow worker whom he con- 
siders his inferior. His whole attitude reflects his dissatisfaction with the 
unfairness of a company that permits such inequities. Hence it is im- 
perative, if a company wishes to minimize such occurrences, to deter- 
mine what each job is worth and, if a range is allowed on each job, what 
each individual is worth. Determining job values comes under the head- 
ing of "job evaluation and wage classification" (which is the subject 
of the present chapter); and determining the value of employees 
(which has been discussed in Chapter 12) is known by a variety 
of names, such as "merit rating," "employee rating," and "service rat- 
ing." 

Job evaluation is essentially a process of measurement. Factors con- 
sidered of importance in determining the value of jobs are measured by 
the use of arbitrarily designed yardsticks. The quantities for the factors 
are summed up for each job, and the totals are converted into dollar 
values. Thus each job is assigned a monetary value that has a definite 
relation to other jobs, since all have been measured by the same yard- 
sticks. 

Various methods have been designed to make such measurements. 
In major outline, all follow the same general pattern, which includes 
the following major steps: 

1. Establishing organizational responsibility 

2. Determining jobs to be evaluated 

3. Making the job analysis 

4. Evaluating the jobs 

5. Preparing wage and salary classifications 

353 



354 PERSONNEL MANAGEMENT 



ORGANIZATIONAL ASPECTS 



Almost without exception, those who have had experience with job 
evaluation programs have concluded that such programs should have 
the approval and sponsorship of top executive levels. Particularly in 
the initial stages, a major committee, of which the president or execu- 
tive vice-president is chairman, should guide the development of job 
evaluation. This is desirable in order to convince any "doubting 
Thomas" that top management is convinced of the permanent value of 
the program. After the program is well under way, periodic conferences 
should be scheduled with top executives so that they may be kept in- 
formed of results and may have the opportunity to offer constructive 
criticisms. 

1. Organization Responsibility. Responsibility for job evalu- 
ation is usually assigned to the industrial engineering section, a wage 
unit of the personnel department, or to some interested operating execu- 
tive. There is much sense to its assignment to industrial engineering 
because of the professional interest, competency, and activity in this 
area. Its placement in the personnel division has much to commend it, 
too, particularly since a total wage and salary administration program 
is often its responsibility. The "interested executive" assignment is usu- 
ally made in smaller companies or when it is wise to avoid jurisdictional 
disputes over its placement in personnel or industrial engineering. 

2. Staffing the Unit. Wherever in the organization the job 
evaluation program is assigned, provision must be made for staffing it 
with competent help. In some companies, trained and experienced help 
is hired from the outside. In others, members of the staff are given 
special training. By the former method, competent help is secured at 
once, but it takes some time for the outsiders to become acquainted with 
the characteristics and policies of the company and its employees. Under 
the latter method, the staff selected for the job is acquainted with the 
company, its executives, and its employees, but it must acquire skill in 
carrying out job evaluation. Both plans have been used successfully, so 
the choice in any particular case depends upon which can be installed 
most economically and effectively. In any event, the staff should be a 
permanent one, with opportunity provided for continuing study and 
experience in order to improve its competence. 

3. Approval of Evaluation Plans. Where authority rests in 
approving and using job evaluation, data should also be specified if all 
organizational aspects of the program are to be properly considered. 
Since the personnel department is a staff department, obviously it cannot 



JOB EVALUATION AND WAGE CLASSIFICATION 355 

enforce the program, the development of which has been assigned to it. 
Hence approval of the plan must be in the hands of some top-line execu- 
tive. Even when this is provided for, the personnel department must 
solve the problem of securing full co-operation of unions and using de- 
partments. More and more, job evaluation has become subject to col- 
lective bargaining. Hence close co-operation with unions at all stages of 
development and use seems desirable. Moreover, building satisfactory 
relations with foremen and supervisors is an essential part of the or- 
ganizational problem. Even though top management approves a job 
evaluation program, the supervisors can delay or even sabotage its de- 
velopment if they withhold their co-operation or give it grudgingly. 

SELECTION OF JOBS TO BE EVALUATED 

Few companies have included all jobs and positions in their evalua- 
tion programs. Ordinarily, the program is limited in most companies 
to shop jobs or office work. In some instances, sales and executive posi- 
tions have been evaluated, too. It might seem at first glance that all 
types and levels of jobs should be included. Usually there are practical 
difficulties in the way of an all-inclusive study. It would take too long, 
and, at the outset, the staff is usually not sufficiently sure of itself to 
tackle the nonroutine jobs. Moreover, such jobs are not the ones ordi- 
narily from which the cries of discontent arise. Executive, professional, 
and technical jobs are usually excluded, at least in the beginning. The 
line of demarcation has been conveniently set in some instances by ex- 
cluding all jobs receiving more than a set amount a year in salary — in 
some cases as low as $4,000 and in others up to $15,000. Or a particular 
level in the organization chart is used; all jobs below the first line of 
supervision have been selected in one case. 

Such exclusions should not, however, be made permanent. When 
time and conditions permit, all jobs should be brought into the plan. 
Otherwise, there will be groups of discontented employees because of 
salary discrepancies between evaluated and nonevaluated jobs. When 
selling jobs are separated from nonselling jobs, or clerical from shop 
jobs, for example, in order to get an evaluation job done, the grievances 
of employees whose jobs have not been studied remain unsettled, even 
though these grievances may be more easily satisfied than those in the 
studied jobs. Indeed, the excluded group may become more vociferous 
when they see the changes being made in the studied jobs. After all, 
though it is easy to separate jobs into those that will and will not be 
evaluated, they are economically related despite exterior differences and 
cannot, for wage and salary purposes, be considered apart. 



356 PERSONNEL MANAGEMENT 

Moreover, when companies try to include heretofore excluded jobs 
in the program, they find that the new jobs can seldom be fitted into the 
existing scheme. The alternatives were to have two evaluation pro- 
grams, which did not quite match, or to start all over and re-evaluate 
the old jobs under an over-all program. Either course is unsatisfactory 
and could have been avoided, had the evaluation plan been developed 
with a view to including ultimately all jobs, though at the outset only 
particular groups of jobs were to be evaluated. 

MAKING THE JOB ANALYSIS 

The basic material of job evaluation is provided by job analysis. 
Since the nature and scope of job analysis have been described in an 
earlier chapter, it is necessary here merely to note the information which 
is secured by job analysis and which is essential to subsequent steps of 
job evaluation. The following information is usually collected: 

1. Job tide or titles, including trade nicknames 

2. Number of employees on the job and their organizational and geographi- 
cal locations 

3. Names of immediate supervisors 

4. Materials, tools, and equipment used or worked with 

5. Work received from and delivered to whom 

6. Hours of work and wage levels 

7. Conditions of work 

8. Complete listing of duties, with an estimate of time spent on each group 
and classified according to daily, weekly, monthly, and occasional 

9. Educational and experience requirements 

10. Skills, aptitudes, and abilities required 

11. Promotional and transfer lines from and to the job 

12. Miscellaneous information and comments 

JOB EVALUATION 

After the foregoing preparations have been made, measurement of 
jobs in nonfinancial terms may then be undertaken. This step, to repeat, 
is based on the assumption that to develop correct financial relation- 
ships between jobs it is first necessary to develop quantitative relation- 
ships based upon arbitrarily constructed yardsticks. In simple terms this 
means that if it is found that Job A is worth 2 units on a predetermined 
scale and that Job B is worth 4 units on the same scale, then whatever 
A is worth in dollars, B should be worth twice as much. How the jobs 
are quantitatively related to each other depends upon the system em- 
ployed. The following systems of evaluation are described here: 

1. The simple ranking plan 

2. The job classification method 



JOB EVALUATION AND WAGE CLASSIFICATION 357 

3. The point system 

4. The factor comparison method 

1. The Simple Ranking Plan. Under the simple ranking plan 
of evaluation, jobs are arranged in order of increasing value in accord- 
ance with the judgment of the arrangers. This is first done on a depart- 
mental level by a committee of job analysts and supervisors, and then on 
interdepartmental levels by a committee which also includes higher line 
executives. In all cases of ranking, the committee members read the 
job descriptions or, if descriptions are not available, examine their men- 
tal pictures of the jobs and grade the jobs in terms of their individual 
interpretations of the relative amounts of such elements as the fol- 
lowing: 

1. Difficulty and volume of work 

2. Responsibilities involved 

3. Supervision given and received 

4. Training and experience requirements 

5. Working conditions 

After all jobs have been ranked, they are grouped into a small number 
of classes, usually from six to ten. Wage and salary rates are established 
for each of the classes, either arbitrarily or by job rating methods to be 
defined later. All jobs are then paid within the dollar range established 
for each class. 

This plan is obviously simple, can be done quickly, and does not re- 
quire a large staff; but it has many disadvantages. The reasons why jobs 
have been ranked as they are, are locked in the minds of the rankers 
whose scales of value vary from one time to another and whose indi- 
vidual concepts of jobs differ. The rankers are ordinarily inexperienced 
in such work, so that their decisions are uncertain and largely a series of 
compromises. When it comes to interdepartmental ranking of jobs, 
their inexperience is even more apparent because few raters are ac- 
quainted with all jobs. Under the circumstances, the job ranking plan 
should be used when time or resources to employ a better method are 
not available or as a check on the accuracy of other methods. 

2. The Job Classification Method. The job classification 
method is a refinement of the ranking method. Under it, major job 
classes or grades are first established, and then the various jobs are as- 
signed by rankers to these grades. Figure 68 (p. 358) illustrates a 
gradation of five classes, designated by a title label and increasing in 
value. The raters read the job descriptions and, depending upon their 
personal interpretations of relative difficulty of tasks, responsibilities in- 



358 



PERSONNEL MANAGEMENT 



volved, and knowledge and experience required, decide in which of the 
classes each job should be placed. 

This method, too, is relatively simple to operate and to understand, 
does not take a great deal of time, and does not require technical help. 
Although it represents an advance in accuracy over the ranking method, 
it still leaves much to be desired, because personal evaluations by execu- 
tives unskilled in such work establish the major classes and determine 

FIGURE 68 



Third Class Clerk: 

Second Class Clerk: 

First Class Clerk: 
Senior Clerk: 



DESCRIPTION OF JOB CLASSIFICATION 



Pure routine concentration, speed and accuracy. Works 
under supervision. May or may not be held responsible 
for results. 

No supervision of others; especially skilled for the job 
by having exhaustive knowledge of the details. Person: 
close application, exceptional accuracy and speed. 



Must have characteristics of 2nd class clerk, 
more responsibility. 



Assume 



Interpretive Clerk: 



Technical, varied work, occasionally independent think- 
ing and action due to difficult work, which requires ex- 
ceptional clerical ability and extensive knowledge of 
principles and fundamentals of business of his depart- 
ment. Not charged with supervision of others to any 
extent, work subject to only limited check. Person: 
dependable, trustworthy, resourceful — able to make de- 
cision. 

Those handling or capable of doing a major division of 
the work. Complicated work requiring much independent 
thinking, able to consider details outside control of super- 
vision or routine. 



into which class each job shall be placed. In this case, as in job ranking, 
it is difficult to know how much of a job's rank is influenced by the man 
on the job. Although the job and not the man should be evaluated, the 
foregoing methods provide practically no safeguards against this form 
of error. The job classification method should be used when an organi- 
zation is small, when jobs are not too complex or numerous, or when 
time and resources to use another method are not available. It will 
produce better results than the ranking method without great increase 
in time or cost. 



JOB EVALUATION AND WAGE CLASSIFICATION 359 

3. The Point System. The point system of job evaluation is the 
most widely used and, according to its proponents, yields accurate re- 
sults without undue expense or effort. In simple outline, it values jobs 
by means of yardsticks, one for each factor that is considered to be com- 
mon to all jobs. By summing up the readings of the several yardsticks 
a quantitative expression is derived for each job. These sums are point 
values, which must then be converted to dollar values. 

In applying the point system, the following steps are taken: 

1. Establish and define a list of factors common to all jobs that are being 
covered 

2. Construct a measuring yardstick for each factor 

3. From the job description, prepare a schedule showing qualitatively to 
what degree each job possesses the various factors enumerated above 

4. Apply the yardstick to convert the qualitative descriptions to quantitative 
units 

5. Sum up for each job the readings obtained for the individual factors 

6. Rank the jobs in accordance with the scores obtained in the foregoing 
steps 

7. Determine the dollar value to be assigned to relative positions in the job 
ranking 

a) Job Factors. Job factors are characteristics that are common to 
all jobs to be covered in the program. They can be readily determined by 
making a survey of representative jobs. Ordinarily, no more than six 
to nine major factors with appropriate subheadings should be used; 
otherwise, the ratings will be subject to useless controversy. 

The factors and subf actors that are found most commonly in job 
evaluation programs are responsibility, skill, effort, education, working 
conditions, and experience required. The factors of the widely used plan 
of the National Metal Trades Association are shown in Table 17 (p. 
360) , and those in a plan devised by the National Office Managers As- 
sociation are shown in Table 18 (p. 360). 

b) Measuring Yardsticks. After the factors to be used are deter- 
mined, yardsticks must be established by which increasing importance 
in each of the factors may be measured. This is usually done in two 
stages. First, the total points that any factor or major subheading of a 
factor may have are established. Such assignments of points determine 
the relative value of the various factors. For example, in the N.M.T.A. 
plan, "skill" has a maximum of 250 points and "responsibility" 100, and 
in the N.O.M.A. plan, "skill" has a maximum of 500 points and "re- 
sponsibility" 200, so in both cases the ratio between the two factors is 
2Vz to 1. Second, varying degrees of each major factor are then as- 



360 



PERSONNEL MANAGEMENT 
TABLE 17 



Points Assigned to Factors of National Metal Trades Association Plan 



Factor 

Skill 

1. Education 

2. Experience 

3. Initiative and ingenuity. 

Effort 

4. Physical demand 

5. Mental or visual demand 

Responsibility 

6. Equipment or process . . . 

7. Material or product 

8. Safety of others 

9. Work of others 

Job Conditions 

10. Working conditions .... 

11. Unavoidable hazards .... 



2d Degree 



3d Degree 



4th Degree 



5th Degree 



28 
44 
28 

20 
10 

10 

10 
10 
10 

20 
10 



42 
66 
42 

30 
15 

15 

15 
15 
15 

30 
15 



56 


70 


88 


110 


56 


70 


40 


50 


20 


25 


20 


25 


20 


25 


20 


25 


20 


25 


40 


50 


20 


25 



TABLE 18 

Points Assigned to Factors of National Office 
Managers Association Plan* 

1. Elemental — 250 points 

2. Skill— 500 points 

a) General or special education 160 

f) Training time on job 40 

c) Memory 40 

£) Analytical 95 

e) Personal contact 35 

/) Dexterity 80 

g) Accuracy 50 

3. Responsibility — 200 points 

a) For company property 25 

h) For procedure 125 

c) Supervision 50 

4. Effort — physical factors — 50 points 

a) Place of work 5 

Z>) Cleanliness of work 5 

c) Position 10 

d) Continuity of work 15 

i) Physical or mental strain 15 

* Source: Clerical Job Evaluation (Bulletin No. 1) (New York: National 
Office Managers Association, 1946). 

signed an increasing number of points within the total established for 
it. For example, in the N.O.M.A. plan, 160 of the 500 points for "skill" 
are allotted to general or special education, which is divided into three 
levels, each receiving a share of the 160 points. Thus a job that requires 
the maximum education would receive 160 points, one that required 



JOB EVALUATION AND WAGE CLASSIFICATION 361 

high-school training would receive 92 points, and one that required 
grammar-school training would be given 40 points. 

These determinations are arrived at through the pooled opinions of 
line and staff executives. Cross checks of various kinds can be employed 
to compare the accuracy of major divisions and point assignments within 
divisions. The N.M.T.A. plan, for example, has been adopted in nu- 
merous companies, so that its allocations have weathered the most dim- 
cult of tests. In any event, after the points have been allocated, they, 
along with verbal descriptions of major classes and grades within classes, 
should be formally written up so that all may use and interpret the 
system similarly. The N.O.M.A. plan cited here is an example of how 
this may be done in simple yet relatively clear terms. 

Although yardsticks are arbitrarily determined and vary in "value" 
from company to company, this does not impair their accuracy. So long 
as the yardsticks in each company are carefully designed and adhered to 
in measuring jobs, the relative values of all jobs can be established with 
accuracy. For example, if Company A and Company B have a maxi- 
mum total of 300 points and 450 points, respectively, for "responsi- 
bility," then, on a similar job, if A gives it 100 points, B should give it 
150 points. And if the total points received by the job are 400 by Com- 
pany A and 600 by Company B, this does not mean that the job is worth 
50 per cent more in Company B, but it means that the yardsticks in 
Company B are 50 per cent longer. In each company, similar jobs will 
be in relatively the same position, as may be seen in the following table: 



JobX 
JobY 



Company A 
(Points) 



400 
550 



Company B 
(Points) 



600 
825 



Ratio 



150.0 
150.0 



Some companies use as few as 400 points as the maximum, and others 
go into the thousands. What figure to use is not so important as ac- 
curacy in the allocation of the points among the factors and grades in 
the factors. 

c) Rating Jobs. After the job factors and measuring sticks have 
been established, the task of evaluating individual jobs can begin. The 
first step is to translate the job descriptions for each job into a written 
statement of the various job factors contained in each job. Thus, if the 
first factor to be measured is "education," the amount of education 
required should be listed on a work sheet for each job. The next step 
is to apply the "education" yardstick against the amount of education 
specified on each job. For example, if a given job calls for four years 



362 



PERSONNEL MANAGEMENT 



of high school and the points assigned to that level of education are 92, 
then this amount is written on the work sheet for the job in question. 

And so on, in order, each factor of each job is measured until points 
have been assigned to all. The points for each job are then totaled to 
get its point rating. Obviously, these steps of rating are largely routine. 
The big tasks are preparing acceptable job descriptions and yardsticks. 
When these have been done, the function of applying the yardsticks 
to each job is relatively easy. 

d) Monetary Conversions. The point values assigned to jobs at this 
juncture are, to repeat, stated in point values which are nonmonetary 
units. Through such measurements, it has been determined how jobs 
rate relative to each other. To be of practical use, the relative positions 

TABLE 19 



Selected Jobs 


Point 
Values 


Average 
Company- 
Salary 
per Week 


Average 

Community 

Salary 

per Week 


A 


400 
420 
460 
500 
540 
560 
600 
660 


$24.00 
25.50 
27-50 
30.50 
33.00 
34.50 
37.00 
43.50 


$25.00 


B 


25.00 


C 


27.00 


D 


30.00 


E 


33.50 


F 


35.00 


G 


38.00 


H 


45.00 







accorded jobs by the point system must be expressed in monetary terms. 
To accomplish this, two major steps are usually taken. First, a plan is 
established for determining how nonmonetary units are to be converted 
into dollar units. And, second, a decision is reached as to how jobs of 
increasing importance are to be grouped into wage classes. 

The task of conversion is usually based upon a comparison of present 
company salary rates with those being paid in the community for com- 
parable jobs. By making a check with other employers in the commu- 
nity, the data for such a comparison are derived. The comparison need 
not be made for all jobs; a limited number of selected jobs that are rep- 
resentative of several points on the job list is sufficient. Let us assume, 
for example, that data on community and company rates, as shown in 
Table 19 are collected for selected jobs. 

Study of such figures would indicate that company rates in this case 
are well in line with community rates. Hence a conversion of point 
values to dollar values could be undertaken. If company and community 



JOB EVALUATION AND WAGE CLASSIFICATION 



363 



rates were not in line, decisions would have to be made as to how rates 
out of line would be reconciled with community rates. 

Careful analysis of these two sets of weekly rates (particularly if 
charts were prepared) would indicate that company salaries increase in 
an arithmetical progression, whereas those in the community follow a 
percentage increase. This provides a clue to two possible bases of con- 
version — the arithmetical and the percentage bases. In the foregoing 
case, the company salary increase is approximately $1.50 for each 20- 
point increase, whereas the community increase is about 5 per cent for 
each 20-point increase. The arithmetic plan results in a straight line 
when point values are set off against dollar units on a chart. The per- 
centage plan results in a line that curves upward. 

The arithmetic plan has simplicity in its favor, but economic prin- 
ciples favor the percentage plan. It has been found, for example, that 
most companies without a considered wage plan tend to overpay the 
lower jobs and underpay the higher jobs. Yet the supply of labor avail- 
able to fill the lower jobs is invariably relatively more plentiful than 
that to fill the higher jobs. Hence, in developing a salary curve, it is 
preferable to select the percentage plan of increase. In this way, jobs 
in the higher point ranges will be accorded a wider dollar range than 
those in the lower point ranges. 

e) Job Classes and Rate Ranges. In most job evaluation plans, it is 
felt undesirable to establish a salary curve in which separate dollar 
values are assigned to each unitary increase in point values. Instead, a 
number of job classes are established, increasing in point values, with 
all jobs in each class being paid the same salary base. It might be de- 
cided, for example, that all jobs would be grouped and paid as follows: 



Point-Value Range 


Salary Base 


Fixed Range 
($5.00) 


Percentage Range 

(20%) 


400-439 


$25.20 
27.25 
30.00 
33.00 


$22.70-$27.70 
24.75- 29.75 
27.50- 32.50 
30.50- 35.50 


$22.70-$27.70 


440-479 


24.50- 30.00 


480-519 


27.00- 33.00 


520-559 


29.70- 36.30 







As may be noted in the foregoing illustration, the brackets of one 
class overlap somewhat those in the ones below and above it. Indeed, 
the top rate for the 400 to 439 class, for example, is above that of the 
lowest rate for the 480 to 519 class. Such overlapping is a recognition 
of the fact that each class includes a number of jobs of varying point 
values. Moreover, it provides an opportunity for employees within a 



364 



PERSONNEL MANAGEMENT 



FIGURE 69 



^ 



given class to obtain base-rate increases if their work and length of 
service merit them. 

The range within each class depends, in part, upon arbitrary decision 
and, in part, upon the number of classes. The ranges in the case cited 
above were based upon a fixed rate of $5.00 and of a 20 per cent differ- 
ence, respectively. The arithmetic base might have been set at more or 
less than $5.00, and the percentage might have been set at some figure 
other than 20 per cent. The range in each class is usually set some- 
where between 20 per cent and 50 per cent of the minimum figure, or 

the percentage is divided by 2, and 
the range for each class is estab- 
lished by adding and subtracting the 
percentage amount from the aver- 
age salary rate for each job class. On 
the other hand, the class range de- 
pends upon the number of classes. 
Thus the more classes there are in a 
given plan, the narrower is the 
bracket for each class. An example 
of a wage chart is shown in Fig- 
ure 69. 

After the wage brackets are es- 
tablished and jobs assigned to their 
respective classes, comparisons will 
ordinarily show that actual salaries 
in some cases exceed the maximum 
for their job class and others fall be- 
low the class minimum. In such in- 
stances, the usual practice is to raise, 
gradually, the underpaid jobs and to 
allow time to take care of the overpaid employees. The latter will even- 
tually leave the payroll or be promoted to higher job classes commen- 
surate with the salaries they are already receiving. 

4. The Factor Comparison System. The factor comparison 
system is also widely used. It is similar to the point system in that jobs 
are evaluated by means of standard yardsticks of value. It differs from 
the latter by using key jobs as the basic yardsticks. Otherwise, the same 
steps are taken in making preliminary job descriptions and in bringing 
together the expert opinion of trained specialists and line executives. 
The major steps in the program consist of the following: 



I i i i 



'■■■■' 



* For this chart and much of the material 
in this chapter, the author is indebted to Jucius, 
Maynard, and Shartle's Job Analysis for Retail 
Stores (Columbus, Ohio: Bureau of Business Re- 
search, Ohio State University, 1945). 



JOB EVALUATION AND WAGE CLASSIFICATION 365 

1. Determine key jobs 

2. Rank the key jobs 

3. Value the factors into which key jobs are divided 

4. Compare all jobs with key job ratings 

5. Establish the dollar value of all jobs 

The first step in this plan is to determine the key jobs. For this 
purpose, jobs are selected that cover the range from low- to high-paid 
jobs. Moreover, the jobs must be ones over which job analysts and 
executives do not disagree on the amount of pay. The jobs, too, must 
be definable in accurate and clear terms. Usually, from ten to thirty 
jobs are picked at this stage. 

Next, the key jobs are ranked. This is first done on an over-all basis. 
Then the jobs are ranked, factor by factor, somewhat similarly to the 
point system. Here, too, salient factors must be selected, such as mental 
requirements, skill requirements, etc. An example of how this may be 
done is shown in Table 20. The five key jobs are ranked in the follow- 

TABLE 20 

Table of Key Jobs 

Rankings and Factor Values 



Job 


Total 
Base 
Rate 


Mental 
Requirements 


Skill 
Requirements 


Physical 
Requirements 


Responsi- 
bilities 


Working 
Conditions 


Rank- 
ing 


Rate 


Rank- 
ing 


Rate 


Rank- 
ing 


Rate 


Rank- 
ing 


Rate 


Rank- 
ing 


Rate 


No. 1 

No. 20.... 
No. 35.... 
No. 75.... 
No. 120... 


$1.47 
1.39 
1.31 
1.23 
1.15 


1 

3 

2 
4 
5 


$0.37 
0.25 
0.31 
0.24 
0.16 


1 
2 
3 
4 
5 


$0.50 
0.40 
0.33 
0.31 
0.22 


5 
3 

4 
2 
1 


$0.25 
0.33 
0.30 
0.40 
0.43 


2 
1 

3 
5 

4 


$0.25 
0.30 
0.22 
0.15 
0.18 


5 

4 
2 
3 
1 


$0.10 
0.11 
0.15 
0.13 
0.16 



ing order for 'mental requirements": Job No. 1 is first, Job No. 35 is 
second, Job No. 20 is third, Job No. 75 is fourth, and Job No. 120 is 
fifth. On "physical requirements," however, the ranking is almost re- 
versed. 

After the key jobs are ranked factor by factor, the base pay for each 
job is allocated to each factor. As may be seen in Table 20, the base 
pay of Job No. 35, for example, is divided in the following way: 

Mental requirements 0.31 

Skill requirements 0.33 

Physical requirements 0.30 

Responsibility 0.22 

Working conditions 0.15 



366 PERSONNEL MANAGEMENT . 

Next, all jobs, one at a time, are compared with the table of key job 
values as just established. This is done by determining for each job the 
key job to which it is most similar, factor by factor. Assume, for ex- 
ample, that Job No. 27 is being checked against Table 20. Assume 
further that it is found to have the following characteristics: 

Similar to For 

Job No. 1 Mental requirements 

Job No. 20 Skill requirements 

. Job No. 35 Physical requirements 

Job No. 35 Responsibilities 

Job No. 20 Working conditions 

The final step of dollar evaluation can now be taken. The individual 
jobs are then given the factor values, factor- by factor, of the jobs to 
which they are similar. In the instance just cited, the rate would be 
$1.40 an hour, which is the sum of the factor values of $0.37 for mental 
requirements, $0.40 for skill requirements, $0.30 for physical require- 
ments, $0.22 for responsibility, and $0.11 for working conditions. 

In carrying out the comparison plan, the various steps included are 
much more detailed than outlined above. For example, after the key 
jobs are selected, ranked, and rated, it is usually found desirable to in- 
clude other jobs, in order to establish a comparison table against which 
all jobs are to be checked. Thus, to the dozen or two jobs that constitute 
the master list, there are added up to 50 or 100 supplementary jobs, so 
that enough detail will be available to fit, without argument, all the 
other jobs into the table. Moreover, as the rating of jobs progresses, it 
may be found desirable to make some changes in the master key jobs 
because some are found, for one reason or another, to be out of line 
with other jobs. These changes obviously take more time than antici- 
pated at the outset, but they do reduce errors in the plan. 

5. Internal and External Consistency. This plan calls for 
a great deal of work because it is essential to develop consistency not 
only in the rankings of the key jobs but also in the allocations of the 
base rates of the key jobs to the various factors. This two-way check, 
in the eyes of the proponents of the factor comparison system, makes it 
superior to the point plan. They admit that their system involves more 
time and effort but insist that the internal consistency of rates is in- 
creased by the methods of checking and cross-checking which they 
employ. 

The external consistency of this plan is obtained in the same fashion 
as in the case of the point rating plan. As noted in connection with the 
latter, it is necessary to compare company rates with community or in- 



JOB EVALUATION AND WAGE CLASSIFICATION 367 

dustry rates for comparable jobs. Through such a comparison, a smooth 
progression of rates, from key job to key job, can be obtained. In the 
case of the comparison method, company rates are related to outside 
rates before the final selection of key jobs is made, whereas in the point 
plan the company rates are usually related to outside rates after the point 
values have been established. 

SUMMARY 

In summary, the point plan and the factor comparison plan make 
possible job evaluations of relatively high accuracy. The plans do not 
eliminate all wage controversies. It is possible to debate such issues as 
why Job X received 87 points and not 89, but the debates over relative 
and even absolute wages will eventually dwindle in number and in- 
tensity. The personnel manager who can support his discussions of wage 
matters with the evidence of a job evaluation plan will have serious 
complaints, but they will be more infrequent and less disturbing than 
those of the one who must rely solely upon his powers of persuasion. 

Whatever plan is adopted, if a union is involved, it is desirable to 
work with it at every stage. If the union is informed after a plan is 
adopted, there is a natural objection because it wasn't "in on the de- 
velopment." When its co-operation is sought from the start, there may 
be disagreements, but the final product becomes a "baby" that will be 
protected as much by the union as by management. 

QUESTIONS AND PROBLEMS 

1. In a given job evaluation program, employees whose jobs fall within the 
point range of 400-419 receive anywhere from $1.40 to $1.65 an hour; 
those within the range from 420 to 439, receive from $1.60 to $1.90. A 
given employee whose job is rated 419 points has now reached the maximum 
in his bracket. He comes to you and argues that his job is worth at least 
one point more for experience or training, or even skill. Do you think you 
could convince him of his "error"? Explain how you would go about this 
problem. 

2. If you had to develop a job evaluation program for a company in which 
employees were generally disgruntled about wages and working conditions, 
what plan of action would you pursue? 

3. How far would you go in bringing the union into the development and 
operation of a job evaluation program? Be specific. 

4. A given company pays all employees who come within the same point range 
the same rate; e.g., all those who come within the established range of 675- 
715 receive $1.18 an hour. What is the reason for this? What is your opin- 
ion of this plan? 



368 PERSONNEL MANAGEMENT 

5. What are some of the problems encountered in staffing the job evaluation 
department? How may they be solved? 

6. In undertaking a program of job evaluation, what jobs should be included? 
Why do some companies leave out positions in the higher-paid levels? 

7. When all jobs are not evaluated at the same time, what policy should be fol- 
lowed in developing the job evaluation program? 

8. What role should supervisors and employees play in a program of job evalua- 
tion? 

9. In what respects is the job classification method of job evaluation an im- 
provement over the simple ranking plan? 

10. How are yardsticks established for arriving at measurements of the job 
factors? Inasmuch as all companies that use the point system do not employ 
job yardsticks of the same length, is their accuracy doubtful? Explain. 

11. Can job evaluation be called an exact process of measurement? Is there not 
a great deal of approximation or estimation in the construction of yardsticks 
and in applying them to particular jobs? In view of such estimates, why 
should job evaluation be deserving of use and confidence? 

12. The use of yardsticks results in determining how many points are to be as- 
signed to each job. What do these points mean? How may they be converted 
to monetary values? 

13. What difficulties are likely to be encountered in making community wage 
surveys? What suggestions can you offer to reduce or circumvent the dif- 
ficulties? 

14. What are the relative merits of the arithmetic base and the percentage base 
in calculating wages for jobs with low point values? With high point values? 

15. What policies seem most reasonable in dealing with the wage rates of jobs 
that are found to be above or below the rates indicated by the wage curve 
established by wage classification? 

16. What are the advantages of providing a wage bracket for each wage class 
over that of using a single-rate plan? What effect is the single-rate plan 
likely to have upon individual initiative? Why is it used? 

17. What is the factor comparison system of job evaluation? Why do its pro- 
ponents claim it to be the most accurate of available evaluation plans? What 
are its disadvantages? 

18. What is meant by the terms "internal consistency" and "external consistency" 
when used in connection with evaluation plans? 

19. Interview a number of companies using evaluation programs, and find out 
how long it took and how much it cost to install them. 

20. If a job evaluation program is used, does this eliminate the need of a wage 
incentive plan? Explain. 



CHAPTER 



19 



Plans of Remuneration 



INTRODUCTION 

In addition to determining how much employees are to be paid, it is 
necessary to select a method for calculating wages. Two companies may 
have approximately the same wage and salary schedule, yet each may 
apply different methods by which wages are computed. Thus one com- 
pany may employ the piecework plan and the other a timesaving bonus 
plan. Or one company may pay its salesmen on a straight commission 
plan, and another may use a combination plan of drawing account and 
commissions. The result in salaries may be approximately the same. 
Yet in both of these cases, the individual companies may be highly 
pleased with their selections and would not consider changing to the 
plan of the other. And each may be justified in concluding that a 
change would be undesirable. 

A wage payment method cannot be selected wisely unless the man- 
agement knows the workings, advantages and disadvantages, and con- 
ditions of best usage of available plans. It is the purpose of this chapter 
to describe and examine the more common types of wage and salary 
plans for production employees, clerical and sales employees, and execu- 
tive groups. The plan that should be adopted in a specific case may 
then be better determined. 

The discussion here is taken up under the following headings: 

1. Basic kinds of plans 

2. Tests of a wage plan 

3. Specific wage plans 

4. Remuneration of salesmen 

5. Executive compensation 

BASIC KINDS OF PLANS 

There are two major kinds of wage and salary payment plans. In 
the first category are plans under which remuneration does not vary 
with output or quality of output. Instead, they are computed in terms 

369 



370 



PERSONNEL MANAGEMENT 



of some time unit. Since it once was common to pay workers by the day, 
time plans of shop workers are referred to as "daywork," even though 
the hour is now the standard time unit of calculation. In the case of 
office and executive employees, the time unit may be the week, half- 
month, month, or occasionally the year. Such plans are called "non- 
incentive'' plans because the methods of calculation will not result in 
greater earnings irrespective of how hard employees exert themselves 
during given time intervals. An example of this category is illustrated 
by Curve / in Figure 70. 

The second category is composed of incentive plans, or those in which 
remuneration depends upon output or factors related to output. The 



FIGURE 70 




OUTPUT IN THE GIVEN TIME PERIOD 



relation between remuneration and output may take any of three direc- 
tions. Thus, as output during a particular time period increases, pay 
may be increased (a) at a decreasing rate, (b) proportionately, and (c) 
at an increasing rate. These plans are illustrated in Figure 70 by Curves 
II, III, and IV, respectively. 

All wage plans are based upon one or a combination of the fore- 
going plans. Those that are derived from Curve / have in themselves 
no power to stimulate production. Plans based upon Curve /// possess 
stimulating power, presumably, of equal intensity at all levels of pro- 
duction because earnings increase proportionately as output. However, 
this does not follow because more effort is required of an operator to 
produce, let us say, the one-thousandth unit in a day than the one- 
hundredth. Yet each unit increases his earnings by the same amount. 
Allowance for this is provided in plans based upon Curve IV. The 
earnings increase faster than output, rising very rapidly at higher levels 
of production when the greatest force must be applied to obtain desired 



PLANS OF REMUNERATION 371 

results. However, on some jobs, as will be noted later, it is not desirable 
to stimulate output beyond a certain point; hence a plan in which stim- 
ulating power falls off rapidly would be preferable. Such plans may 
be based upon Curve II in which earnings increase as output does, but 
at a decreasing rate, finally tapering off to an insignificant increase. 

This brief description of fundamental curves of wage progression 
serves to show that each type has conditions of favorable use. There 
is no one plan that is best under all circumstances. A plan (or plans 
in some cases) must be selected to do the job that has to be done. Be- 
fore describing and evaluating in more detail the more common types 
of wage plans, it is desirable, therefore, to outline the tests by which 
the feasibility of particular plans may be ascertained. 

TESTS OF WAGE PLANS 

The apparent purpose of a wage plan is to remunerate employees 
for the work they perform. This is only one side of the story because 
it gives the impression that output is a function of wages alone. Wage 
plans do more than this; the nature of the plan itself may or may not 
appeal to workers. Hence it is important to know what characteristics 
of wage plans appeal to employees so that they will bestir themselves 
to greater efforts. The following are desirable qualities in a wage plan: 

1. Easily understood 

2. Easily computed 

3. Earnings related to effort 

4. Incentive earnings paid soon after being earned 

5. Relatively stable and unvarying 

1. Understandability of Wage Plans. The reasons for these 
qualities may be quickly explained. To begin with, all employees like to 
know how their wage plan works. If they do not, they become fearful 
that they are not getting what is justly due them. This is simply a 
specific application of the general rule that we fear or distrust that 
which we do not understand. Hence it is desirable to select a simple 
wage plan; or, if a complicated one is chosen, all employees should be 
shown how it works. The plan need not be a simple one, but it must 
be understood. Mere acceptance of a plan by the employees does not 
mean that it is understood. For example, a supervisor in one company 
was asked to explain to a group of foremen his company's wage plan. 
He took about fifteen minutes in his attempt, but succeeded only in 
confusing everyone. Obviously, if a supervisor cannot describe the basic 
outlines of a plan in fifteen minutes, it is scarcely conceivable that any 
of the employees understand how it works. 



372 PERSONNEL MANAGEMENT 

2. Ease of Computation. Somewhat similar to the characteris- 
tics of understanding is that of ease of computation. Most employees 
like to be able, first, to compute daily, from time to time, what they are 
making and, second, to check the accuracy of their pay envelopes. If 
they can do neither without help or taking too much time, they will lose 
confidence in the plan. The effect upon their output will be adverse. 
Thus a wage payment plan should be sufficiently simple to permit quick 
calculation, or arithmetical tables should be supplied by reference to 
which employees can quickly determine or check their earnings. 

3. Effective Motivation. A pay plan should also provide for 
incentive within the work range of a particular job. To begin with, 
standards should be set so that they are attainable by competent work- 
ers. Obviously, if par is beyond the capacity of employees, they will not 
try. However, a par standard attained without trying is equally poor. 
Again, if quality of workmanship is significant in particular cases, a 
wage payment plan should not be selected that will stimulate output 
and affect quality adversely. Or, if it is desired to stress output, a wage 
plan should be selected that pays a high premium at the upper levels 
and penalizes — or at least does not overcompensate — low production. 
And, finally, if quantity and quality are to be stressed at the same time, 
a plan should be selected that will not unduly influence the worker to 
overspeed or to become careless of quality. 

4. Relation between Effort and Payday. Incentive wage 
plans, if adopted, should provide for remuneration to employees as soon 
after effort is exerted as possible. In this way, the reward or penalty is 
fixed in the minds of the employees in connection with the work they 
did. Payment at the end of each day would be best from this point of 
view, were it not for the undue cost of distributing a daily payroll. A 
weekly period is customary and serves this purpose, provided that the 
payday is not too distant from the work to which it applies. An interval 
of three or four days, at most, should be sufficient to calculate and dis- 
tribute the payroll. 

5. Stability of Wage Plans. Finally, a wage plan should be 
relatively stable and unvarying. Frequent tinkering with wage plans 
gives the impression that the management is seeking to defraud the em- 
ployees. Hence it is imperative thoroughly to consider available plans, 
so that need for subsequent changes or tinkering is eliminated. But 
incentive plans, particularly, though stable in appearance, may be made 
variable or given the appearance of variability by rate cutting, changes 
in time standards, or changes in the value of money. As will be noted 
later, rate cutting has been an evil that has made the piecework plan 
suspect in many quarters. 



PLANS OF REMUNERATION 373 



TYPES OF WAGE PAYMENT PLANS 

A large number of wage plans have been devised, but relatively few 
have been used to any significant degree. Various surveys have disclosed 
that daywork and piecework are used to pay about 90 per cent of all 
industrial workers. The other 10 per cent or so are paid under a mis- 
cellany of plans, with the Halsey Plan of timesaving, or some variant, 
predominating. Hence only the following plans, which include the more 
widely used and are representative of various types, are discussed here: 

1. Daywork 6. 100% Plan 

2. Measured daywork 7. Bedaux Plan 

3. Piecework 8. Gantt Plan 

4. Taylor Plan 9. Rowan Plan 

5. Halsey Plan 10. Emerson Plan 

In the formula of the wage plans the following symbols are used: 

W = Wages earned 

H = Hours actually worked 

S = Standard time 

P = Percentage 
R — Rate per hour in dollars 
U = Rate per unit in dollars 
N = Number of units produced 

1. Daywork. Daywork is not only the oldest but the most com- 
mon way of remunerating employees. It refers to all time payment plans 
used in paying workers, although the hour is the time unit most com- 
monly employed. Wages are computed under it by multiplying the 
number of hours worked by the rate per hour, as follows: 

HXR = W. 

For an employee who works overtime and is paid extra for the over- 
time, either of the following formulae may be used; assuming H to be 
the total hours worked, H n the nonovertime hours, and H the over- 
time hours: 

(H X K) + (H X R) 50% = W, 
(H n X K) + (H X 20 150% = W. 

If an employee had worked 52 hours in a given week and his basic 
rate were $1.10 an hour and he received overtime allowance over 40 
hours, using the latter formula his pay would be calculated as follows: 

(40 X $1.10) + (12 X $1.10) 150% = 
44.00 + 19.80 = $63-80. 



374 PERSONNEL MANAGEMENT 

The daywork plan has been widely adopted for several reasons. It 
is simplicity itself to compute and to understand. Also, it is unnecessary 
to set standards as the basis for computing wages. Hence it can be used 
whenever it is possible to calculate the amount of time workers put in 
on their jobs. It is also strongly supported by many unions because the 
plan does not stimulate " speed-ups" or penalize the average or less-than- 
average worker. And under it quality is not sacrificed because it does 
not stimulate workers to concentrate on production alone. On the other 
side, the major disadvantage of daywork is its lack of motivation, which 
is very serious if high production is desired. It is also undesirable from 
the point of view of cost accounting because unit costs are more difficult 
to compute than under such plans as piecework. 

The adoption of daywork is generally advisable under the following 
conditions: 

1. Standards of output cannot be readily or accurately set. 

2. Output is mainly made up of odd- lot jobs differing one from another. 

3. Quality, material and machine costs, and workmanship are more important 
than quantity. 

4. Output can be controlled by management or conveyors and is not subject 
to individual influence. 

5. Employees insist upon its use. 

Daywork should not be used when the reverse of the foregoing holds 
true. In addition, where cost calculations are significant, some other 
plan may be more desirable or a system of standard costs should be 
installed. 

2. Measured Daywork. The advantages of daywork may be 
gained and the disadvantages minimized by the system known as "meas- 
ured daywork." Under this plan, employees are paid under the day- 
work system, but hourly rates are revised periodically in accordance with 
measures of their over-all qualifications. The following steps are taken 
under this plan : 

1. The base rate for each job is carefully established by means of job evalua- 
tion. 

2. A table of values is prepared to show the percentage to be added to the 
base rate on each job because of varying degrees of personal performance 
in regard to productivity, quality, dependability, and versatility. 

3. Each worker is rated periodically (practice varies the period from three to 
six months) on his productivity, quality, dependability, and versatility. 

4. Each worker is then paid during the next work period at the base rate 
plus the percentage as determined by his rating and the table of values. 

For example, in a given installation it has been decided to allow up 
to 30 per cent above base rate for superior personal performance in 



PLANS OF REMUNERATION 375 

productivity, quality, dependability, and versatility. A table of values 
is established so that ratings of 70 per cent or less earn the base rate, 
whereas higher ratings earn an addition to the base rate for the coming 
period. For example, employees who rate 80 per cent are allowed an 
additional 10 per cent; those who rate 90 per cent are allowed 20 per 
cent; and those who rate 100 per cent are allowed 30 per cent. 

The advantage of this plan is that wages may be easily computed, 
yet employees are provided with a motive for improving their perform- 
ance. Moreover, earnings are not dependent upon one factor, such as 
output, but are affected by quality of output, dependability, and versa- 
tility. In addition, this plan provides supervisors with an opportunity 
to point out to employees specifically which aspects of their jobs can 
be improved. Management thereby assumes a job which is often shifted 
to the workers themselves by other plans. 

The major disadvantages of this plan are twofold. First, it is not 
easy for employees to understand why various factors have been as- 
signed particular weights or why the base rate and why the maximum 
amount that may be added to the base rate is, let us say, 30 per cent, 
as in the case just cited. Unless employees have confidence in the fair- 
ness of a company, these matters may be questioned. Second, the in- 
centive value of the plan is not particularly strong from day to day 
because rate changes are made at relatively infrequent periods. Hence, 
on any given day, the employee may let down and feel no remorse 
because the eifect on the rate for the next period is somewhat re- 
mote. 

The conditions under which this plan would be most plausible in- 
clude the following: 

1. Over-all performance is important in measuring employee worth. 

2. Specific output standards cannot be accurately set, yet some incentive for 
better production is desirable. 

3. Gradual and stable improvement in workers is desired rather than variable 
day-to-day performance. 

4. Supervisors are to be impressed with the need of more careful observation 
of employees and the need for better guidance, training, and improve- 
ment. 

3. Piecework. The most widely used incentive plan is piecework. 
As its name denotes, wages are determined by the number of pieces or 
units of work that are completed. Each piece is given a prescribed value, 
which is known as the "piece rate." Rates are commonly set by time 
study, although in the past and in some companies in the present, rates 
have been set by using past experience on similar jobs or even mere 



376 



PERSONNEL MANAGEMENT 



guesswork. The formula for wage computations under this plan is as 
follows: 

N X U = W. 

Thus, if on a particular day an employee produced 1,080 units on a 
given job, the rate for which was $0.01 a unit, his earnings would be 

1,080 X $0.01 = $10.80. 

His earnings at different rates of production would take the direc- 
tion shown in Figure 71. When employees are working on small lots, 

FIGURE 71 




GANTT 

TAYLOR 



PIECE WORK 



ROWAN 
EMERSON 



MEASURED 
DAY WORK 
HALSEY 



DAY 
WORK 



OUTPUT IN THE GIVEN TIME 



making more than their hourly rate on some and less on others, it is 
the usual practice to add the piecework earnings together for a particu- 
lar period, sometimes for a day but in no case for more than a week, 
to determine whether total piecework earnings exceed daywork. If they 
do not, it is customary to pay the day rate. Under this practice, piecework 
is called "guaranteed piecework." In most cases, too, output is inspected 
to determine how many parts have been spoiled, because these are not 
included in calculating the operator's earnings. 

Its incentive value, simplicity in calculation, and understandability 
are its most commanding advantages. While there may be misunder- 
standings about the content of a piecework system, the form of it never 
gives trouble. Piecework is also favorable from a cost accounting point 
of view because the labor cost of each unit of output is the same, ir- 
respective of output. 



PLANS OF REMUNERATION 377 

The major disadvantage of the plan derives from its misuse. Over 
the years, many employers either selfishly or to correct mistakes in set- 
ting rates have cut rates time and time again. To the employee who is 
at the receiving end of such cuts, it looks like a scheme to get more 
production at his expense. For example, if an employee has become 
accustomed to earning $8.00 a day on a job on which the rate is $0.04 
a unit, he would attempt to keep to that amount if the rate were ad- 
justed to $0.03 ^2, then to $0.03, and maybe if it were cut to $0.02. 
This means that his output, which was 200 a day under the first rate, 
would have to be increased to 229, 267, and 400, respectively. After 
this happened to him or his fellow workers, a resistance movement 
would develop along the following lines: first, workers would loaf 
while being time-studied and, second, they would not earn over an 
amount which would encourage the management to cut rates. 

Another disadvantage of piecework is that the standard for a job is 
expressed in monetary terms which makes it subject to changes in the 
value of money. Thus the standard must be changed as the dollar 
changes in value. During a period of increasing prosperity, for ex- 
ample, piece rates have to be revised upward (and downward during 
depressions), although the time taken to do the job still remains the 
same. Such changes tend to weaken the confidence of the employee in 
the fairness of the system. Finally, the piecework plan, with its uniform 
progression of earnings as output varies, does not provide sufficient 
incentive at higher outputs when the effort required is greater. 

4. Taylor Differential Piecework Plan. To provide addi- 
tional incentive to reach higher levels of production, Frederick Taylor 
developed the piecework plan with two piece rates, a high and a low. 
Thus an employee who produced less than a prescribed rate an hour was 
paid at the low rate, whereas his earnings were computed at the high 
rate if his output equaled or surpassed the prescribed rate. This plan 
is illustrated graphically in Figure 7 1 . Assuming that the low and high 
rates on a job were $0.02 and $0.03, respectively, and the breaking 
point 25 units, an operator's earnings would be: 

24 X $0.02 = $0.48 if he produced below the breaking point, and 

25 X $0.03 = $0.75 if he produced above the breaking point 

Thus there is a strong incentive to produce at least 25 units an hour in 
this instance. 

The major advantage of this plan is its high incentive value. The 
high labor cost may seem to be a disadvantage to the employer, but it is 
not because high production reduces the overhead costs per unit by an 



378 PERSONNEL MANAGEMENT 

amount greater than the added labor costs. The disadvantage of this 
plan lies in the losses to the employer and to employees if the breaking 
point is incorrectly set. Care must be taken in setting it high enough 
so that it represents a real challenge to workers, yet not so high that 
it can be attained only infrequently, or so low that it can be reached 
without exertion. Since most employers have not been willing to spend 
the necessary time and money in setting rates with such precision, its 
adoption has been infrequent. Yet under appropriate conditions, it has 
attractive features. 

5. Halsey Plan. One of the oldest wage incentive plans is the 
Halsey Premium Plan under which employees are paid a bonus based 
upon a percentage of the time saved under the standard time set for 
the jobs on which they work. Under this plan the following formula 
is used: 

(H X 20 + KS - H)R]P =W. 

Thus, if a worker whose rate was $0.90 an hour took 8 hours on a job 
on which the standard time was 12 hours, and the percentage was 
66 2 A per cent, his earnings would be: 

(8 X $0.90) + [(12 - 8) $0.90] 66%% = $9.60. 

When the plan was first developed, time standards were loosely set. 
Hence the percentage of time saved which went to the employees was 
rather low, usually 33 l A per cent. As standards have been set with 
greater accuracy, the percentage allotted to the workers has steadily 
gone up, so that in some installments of this plan employees are re- 
ceiving as much as 100 per cent of time saved. The increase in the per- 
centage does not necessarily mean that workers earn more than before. 
The effect of the increased percentage may be offset by the decreased 
time allowed in the time standard. For example, in the following, the 
earnings are the same, although the time standards and percentage al- 
lowed vary: 

(8 X $1.20) + [(16 - 8) $1.20] 33H% = $12.80, 
(8 X $1.20) + [(13H - 8) $1.20] 50% = $12.80, 
(8 X $1.20) + [(12 - 8) $1.20] 66%% = $12.80. 

The Halsey Plan has two major advantages. First, since the standard 
upon which earnings are based is expressed in time units, it is not sub- 
ject to the random fluctuations of the dollar. If adjustments must be 
made in earnings, the hourly rate can be changed, leaving the time 
standard unaffected. Thus the employees are not inclined to lose faith 



PLANS OF REMUNERATION 379 

in job standards. Second, since the bonus is based upon time saved, 
the attitude of employees is conditioned by the positive factor of gain- 
ing through saving. This has a better psychological effect than that 
produced by the pressure of piece rates, for example. 

6. The 100 Per Cent Time-Saving Plan. These advantages 
have been recognized by the users of the 100 Per Cent Time-Saving 
Plan and the Bedaux Plan, which are variations of the Halsey Plan. The 
100 Per Cent Plan gives the same results as piecework; yet the emphasis 
of the former leaves a better impression with the worker. As shown in 
the following example, piecework and the 100 Per Cent Plan yield 
the same "take-home" results. If a piece rate of $0.03 a unit is estab- 
lished on a given job, to a worker whose base rate is $0.90 an hour 
that is the same as saying the time allowed to do each piece is 2 minutes. 
If he produced 270, 300, and 360 during 8 hours each on 3 successive 
days, his earnings under piecework would be: 

270 X $0.03 = $ 8.10, 
300 X $0.03 = $ 9.00, 
360 X $0.03 = $10.80. 

If his earnings had been computed under the 100 Per Cent Plan, the 
pay would have been the same. In that event, the jobs on which he 
worked would have been allowed the following times: 

First day, 270 units X 2 min. = 540 min. or 9 hr., 
Second day, 300 units X 2 min. = 600 min. or 10 hr., 
Third day, 360 units X 2 min. = 720 min. or 12 hr. 

The remuneration in each case would have been calculated as 
follows: 

(8 X $0.90) + [( 9 - 8) $0.90] 100% = $ 8.10, 
(8 X $0.90) + [(10 - 8) $0.90] 100% = $ 9.00, 
(8 X $0.90) + [(12 - 8) $0.90] 100% = $10.80. 

7. The Bedaux Plan. The Bedaux Plan is a copyrighted plan 
which may be used only upon authorized permission. It follows the 
Halsey Plan in being a timesaving plan. In the Bedaux Plan, time 
standards, instead of being expressed in hours, are expressed in minutes, 
which are known as "B's." Moreover, the percentage of the saving al- 
lowed to workers is usually 75 per cent, with the other 25 per cent 
usually going to supervisors and helpers instead of being retained by 
management. This sharing with assisting workers is intended to spur 
their co-operation in making direct workers more effective. If the 



380 PERSONNEL MANAGEMENT 

worker cited in the previous paragraph had been given 75 per cent of 
time saved as a bonus, his earnings, on the third day for instance, under 
the Halsey Plan and under the Bedaux Plan, respectively, would have 
been as follows: 

(8 X $0.90) + [(12 - 8) $0.90] 75% = $9-90, 

(480 X $0,015) + [(720 - 480) $0,015] 75% = $9.90. 

The Halsey Plan and timesaving plans derived from it are more 
complicated than piecework, and hence are not used as frequently. More- 
over, the varying cost per unit makes it less desirable from a cost ac- 
counting point of view. However, were the 100 per cent feature adopted 
with standards set accurately, this type of plan would have a better 
appeal than piecework, despite the simplicity of the latter. 

8. The Gantt Plan. The Gantt Plan is another one of those de- 
signed around the turn of the century by a member of the group that 
became disciples of Taylor and extenders of his school of scientific 
management. This plan, like Taylor's differential piecework plan, was 
based upon careful study to set time standards. It departed from Taylor's 
plan in that it is a timesaving bonus plan. But, unlike the Halsey Plan, 
it pays a very high bonus for attaining or surpassing the time standard. 
The formula for this plan is divided into two parts, as follows: 

1. For those who do not equal standard time, wages are paid at the hourly 
rate for the time expended, thus — 

HxR = W. 

2. For those who exceed the standard, the wages for the time expended are 
computed as follows: 

(SX R) 120%) = W. 

Thus, on a job for which the standard was set at 10 hours of two work- 
ers whose hourly rate was $0.90, one who took 10 hours and 1 minute 
would be paid $9.02, and one who took 10 hours would be paid $10.80, 
computed as follows: 

First worker: (10 + 1/60) X $0.90 = $9,015, 
Second worker: (10 X $0.90) 120% = $10.80. 

Obviously, the pressure to equal the standard is great because the 
difference in wages is striking. And the pressure to exceed standard 
continues because the time saved can also be applied to other jobs, thus 
increasing the pay even more. 

The advantage of the Gantt Plan lies in the strength of its motiva- 



PLANS OF REMUNERATION 381 

tion. Establishing fair standards for it is not easy, nor is it easy to 
compute or understand. Its use, therefore, should be restricted to the 
following conditions: first, when overhead costs are high and workers 
must be stimulated to achieve high production in order to lower unit 
overhead costs; second, when standards can be set accurately; and, 
third, when workers can be taught to have confidence in the fairness of 
the standards. 

9. The Rowan Plan. One of the oldest wage incentive plans is 
that devised by Rowan during days when standards were not set ac- 
curately and consequently there was high probability of employees 
"running away" with the rate — that is, earning wages that are exces- 
sively high. Under it, wages increase, but at a decreasing rate as output 
increases, as shown in Figure 71. Hence, an employee, no matter how 
hard he worked, could not make more than twice his hourly rate. The 
formula for this plan is as follows: 

(HXIO+ (^r^)HR = W. 



m 



Thus an employee whose hourly rate is $0.90 and who did a job in 
8 hours that was supposed to take 12 hours would be paid $9.60, 
computed as follows: 

(8 X $0.90) + ( U ~ ) 8 X $0.90 = $9.60. 



The curve which earnings take as output increases is its major advan- 
tage. Since it is fruitless to overexert oneself, of course there should 
be no need to cut rates because employees will not "run away" with the 
rates. In addition, this makes the plan useful when it is desirable to 
stimulate production to some extent but not to the point that quality 
is endangered. And since the highest increases in wages are obtainable 
at lower rates of production, its use is advisable in the case of learners 
who need encouragement within the narrow limits of their capacity. 
The major and critical disadvantage that has limited its use to a very 
few cases is the obvious complication involved in calculating it and 
understanding the theory of its operation. 

10. The Emerson Plan. A plan which illustrates another type of 
wage computation is the Emerson Efficiency Plan. Under it, the relative 
efficiency of employees is computed each week and a bonus paid of vary- 
ing degree, depending upon the efficiency attained. Thus the plan calls. 



382 PERSONNEL MANAGEMENT 

first of all, for establishing a table of values for increasing degrees of 
efficiency. Selected values taken from one plant in which bonuses start 
at 66 per cent efficiency follow: 

Per Cent Added 
Efficiency to Basic Earnings 

66 1 

70 4 

75 5 

80 8 

85 11 

90 15 

95 20 

100 25 

For each job, a standard time allowance is established, by time study 
or reference to records of similar jobs completed in the past. At the 
end of each week, each worker's efficiency is derived by dividing the 
time allowed on various jobs by the time taken. To his base wage is 
then added a percentage for his relative efficiency. For example, a 
worker who took 40 hours to complete jobs on which the allowance 
was 36 hours would be paid $41.40, computed as follows: 

(H X 20 + (H X 20 selected % = IV, 

(40 X $0.90) + (40 X $0.90) 15% = $41.40. 

The major advantage of this plan lies in its emphasis upon efficiency. 
Comparisons can readily be made from week to week or between em- 
ployees; thus personal efficiency tends to rise because of the competitive 
factor. The plan has two disadvantages: first, the plan is expressed in 
terms which are not readily understandable, and, second, employees tend 
to complain about the standards that they must surpass in order to earn 
a bonus. 

The plan has the most favorable conditions of use when it is de- 
sired to educate workers in the need of efficiency and to bestir them to 
compete in raising their relative efficiency. 

GROUP PLANS 

The foregoing plans have been discussed on the assumption that each 
individual is remunerated in terms of his own efforts. In addition to 
such individual or ' 'straight" calculations, plans may be placed upon a 
group basis. Earnings of individuals are thus computed by prorating the 
bonus or premium produced by the group. For example, the following 
table shows how the individuals in a group would share a bonus of 
$32.50 which they had earned as a unit: 



PLANS OF REMUNERATION 



383 



Employee 


Hours 
Worked 


Rate per 
Hour 


Basic 

Wage 


Pro Rata 

Share 


Bonus 


Total 
Wage 


A 


40 
36 
38 
32 


$0.90 
1.00 
0.94 
0.80 


$36.00 
36.00 
35.72 
25.60 


$ 36.00/ 
133.32 

36.00/ 
133.32 

35.72/ 
133.32 

25.60/ 
133.32 


$8.78 
8.78 
8.69 
6.25 


$44.78 


B.. 


44.78 


C 


44.41 


D.... 


31.85 








$133.32 





In summary, there are numerous plans from which it is possible to 
select one or more that will fit one's requirements. Significant, in any 
event, is the importance of calculating basic standards fairly and equi- 
tably. But perhaps most important of all is the need for determining 
how much remuneration should be provided to attain varying degrees 
of employee efficiency. To this aspect of wage plans, there is no simple 
answer except the advice that intense study is indispensable. 

Whether or not incentive plans should be used is not examined here, 
for the simple reason that, unless unions or conditions prevent, incen- 
tive plans are ordinarily superior to nonincentive plans, not only for the 
employee but also the employer. It is scarcely conceivable, for example, 
how the record of production displayed in Figure 72 (p. 384) could 
have been attained, had not the company in question used an incentive 
plan. Of course, they are not easy to install in intermittent and non- 
standardized types of work, but even here successful plans may be 
found. Maintenance jobs, for example, once thought of as daywork 
jobs, are increasingly being paid on some plan of incentive. The key in 
all of these instances is careful determination of standards of production 
and careful establishment of a unit of output. 



REMUNERATION OF SALESMEN 

Remuneration of salesman may be by straight salary or some form 
of incentive compensation. Since the salesman's job is usually more 
variable than the average factory job, the problem of establishing a 
stable and satisfactory unit of output is much more difficult; some even 
conclude that it is impossible. Nevertheless, various incentive plans have 
been devised that have had varying degrees of success. Although details 
vary, all plans can be grouped under one or more of the following 
headings: 



384 



PERSONNEL MANAGEMENT 



1. Straight salary 

2. A commission based upon units sold 

3. A commission based upon factors affecting sales other than units sold 

1. Straight Salary Plans. Straight salary plans include those in 
which salesmen are paid strictly in accordance with the time they spend 
on their jobs. The week is the common time unit. This plan finds favor 
with those who contend, first, that the salesman in the particular case 
has little or no control over how much he sells and, second, that the 



FIGURE 72. Total Annual Compensation per Employee, Lincoln Electric Company and Six Se- 
lected Major Corporations,* 1934-50, and Sales Value per Employee, Lincoln Electric Company 
and Electrical Manufacturing Industry, 1934-49f 




1934 



1936 



1938 



1940 



* General Electric Company 
Westinghouse Electric Co. 
Sylvania Electric Products, Inc. 



1942 1944 

YEARS 



1946 



1948 



1950 1952 



Allis-Chalmers Mfg. Co. 
General Motors Corp. 
U.S. Steel Corp. 



t Source: Adapted from James F. Lincoln, Incentive Management (Cleveland: Lincoln Electric Co., 1951), pp. 
258-63. 



PLANS OF REMUNERATION 385 

number of factors which are important in affecting sales is so large 
that it is impossible to give due consideration to all of them in any in- 
centive plan. Some also favor straight salary because they have seen 
commission plans misused to the point that no one retains confidence 
in them. Where the foregoing conditions prevail, the use of commis- 
sion plans is obviously questionable. 

2. Unit Commission Plans. Straight salary plans, in and of 
themselves, contain no incentive value. Hence, when the amount of 
sales depends largely upon the calls that are made and supervision itself 
cannot spur salesmen to take the necessary initiative, commission plans 
are desirable. Under these plans, salesmen are paid a set commission 
for each unit sold, a commission that varies as output increases, or a 
commission that begins only after a set quota has been sold. The bases 
for commissions are so numerous that space does not permit full de- 
scriptions. However, two opposing theories are worth citing. In some 
companies the rate of commission decreases as sales increase; and in 
others, the rate increases. In the former case, the belief is that salesmen 
who make too much will lose their zest for work. In the latter case, it 
is recognized that large volumes are harder to make, yet add greatly 
to the profit of the company. Hence it is concluded that increasing com- 
missions are needed to attain the high volumes. Which theory should 
be followed depends, among other things, upon the nature of the sales 
problem, the type of salesmen required, and the type of sales executives 
directing the sales. But in any event, the existence of such opposed 
theories illustrates the need for care in selecting an appropriate plan. 

3. General Commission Plans. Because selling often involves 
much more than repeated calls to get more business, some incentive 
plans are based upon other factors as well as volume of sales. For exam- 
ple, bonuses may be computed in terms of such factors as the following: 

1. The quantity of various products sold, graded by their profitability to the 
company 

2. New business obtained 

3. Service calls made 

4. Repeat orders obtained 

5. Sales expenses reduced 

6. Cash business obtained relative to credit accounts 

7. Percentage of bonuses obtained from new or highly competitive areas 

8. Complaints received on old customers' list 

Such plans call for important decisions regarding the weights that 
the various factors will have and how they are to be measured. This is 
very difficult; yet if the factors are of importance and the salesmen's 



386 PERSONNEL MANAGEMENT ' 

attention should be called to them, the work necessary to the develop- 
ment of standards will have to be taken. 

4. Characteristics of a Good Compensation Plan. Of in- 
terest in this connection are the findings of the Dartnell Corporation, 
which surveyed 1,800 plans. It was concluded that successful compensa- 
tion plans allowed for the following payments to salesmen : 

1. Security money, in the form of a basic salary or drawing account against 
commissions 

2. Incentive money, over and above base pay, earned by putting forth extra 
effort 

3. Opportunity money, earned through promotion to more profitable ter- 
ritories or branch managerships 

4. Loyalty money, which allows in the base salary for length of service or 
special contributions to the welfare of the business 

5. Practice money, to encourage testing of new sales ideas which might 
otherwise adversely affect regular income sources. 1 

EXECUTIVE COMPENSATION PLANS 

The compensation of executives, although paid to a relatively small 
number of employees, nevertheless affects many, many more. For ex- 
ample, all employees are more or less interested in what the "boss" gets. 
If the earnings are out of line with their standards, however arrived at, 
they become disgruntled, and then the undesirable results of industrial 
unrest become apparent. In addition, if executive salaries are exorbitant, 
they may cut into the share that employees receive. This is usually a 
negligible amount, however. One company illustrates the relation of 
executive salaries to employee wages by stating that, were all salaries 
of top executives distributed to employees, the latter would gain the 
equivalent of a package of cigarettes a week. 

And executive compensation is, of course, of interest to the execu- 
tives themselves, who, like the employees, are desirous of receiving as 
much as possible for their services. The question is raised, then, and as 
yet is unanswered, as to how much should be paid to executives in order 
to obtain their services. It is easy to say that they should be paid what 
they are worth, but some violent controversies have raged as to whether 
or not any executive is worth a million dollars a year, as some have been 
paid. One side argues that, without the leadership of the executive who 
received such a salary, the company would not have been so successful 
as it was, nor could it have employed as many workers at the wages that 
it did. The other side retorts that the same results could have been at- 



1 "Trends in Salesmens' Compensation," Management Review, November, 1953, pp. 
663-64. 



PLANS OF REMUNERATION 387 

tained without such munificent compensation to the executive in ques- 
tion, since a lesser amount and the prestige of the position would have 
been sufficient compensation. Executive talents are not so scarce, add 
the opponents, that a few isolated individuals possess a monopoly. 

All of this leads to the conclusion that great care must be used to 
set compensations for executives, since such decisions affect the attitudes 
of others in addition to the efficiency of the executives. It is desirable 
to describe executive compensation methods so that the relative merits 
of available plans may be noted. This is done here under two headings: 
first, major executives and, second, minor executives. 

1. Major Executives. Straight salary, bonuses, and stock pur- 
chase plans are used to compensate major executives. Straight salary is 
undoubtedly the most common method. It is often adopted because the 
task of managing is made up of many variables and imponderables, the 
direct measurement of which would be a Herculean task. Hence, as is 
true of any job whose units of work cannot be readily defined or meas- 
ured, the only alternative is the daywork or time interval principle. 
With top-level executives, the month or the year is commonly used. 

However, many companies hold the opinion that the full measure 
of executive effort cannot be obtained unless some stimulant is applied. 
In such cases, indirect measures of accomplishment are used to deter- 
mine how much effort executives have exerted beyond that which is 
normal for the job and which is compensated for on a salary basis. The 
most common measures are profits, sales, and expenses. Using these as 
a base, bonuses are paid in addition to the salary. Thus one company 
pays its top executive a percentage of the profits the company earns. 
Another establishes a quota of profits which must be earned before 
executives share in profits. And a third establishes a sliding scale of 
percentages related to sales ( a fourth ties this to expenditures ) by which 
the base salary will be increased. 

Another plan of compensating executives is that in which stock is 
offered to them at a nominal figure or at a figure that leaves ample room 
for speculative profit. The executives are thus given a stake in the busi- 
ness, which can redound to their benefit if their efforts are skillfully 
applied to its operation. Usually, these plans make handsome rewards 
possible. For example, an executive who took charge of an ailing busi- 
ness was given the option to buy 100,000 shares at $12 a share. Within 
a year the stock rose in value to $16, yielding the executive a paper 
profit of $400,000. Had the stock not risen in price, however, his efforts 
would have been rewarded only by a small salary. Hence the proba- 
bility of small earnings as well as of high profits makes such plans 



388 PERSONNEL MANAGEMENT . 

highly stimulating. Indeed, the plan is criticized by some on the grounds 
that executives become so conscious of the market price of the stock 
and the short-run factors that affect prices that they do not pay atten- 
tion to the fundamentals that make for long-run stable growth of a busi- 
ness. 

The theory in these cases is that profits are correlated to executive 
efforts and thus an accurate measure of executive contributions. 2 The 
theory is weak because profits are sometimes made no matter how un- 
wisely executives act and losses are incurred despite the best possible 
judgment. Prosperity periods and depressions leave in their wakes re- 
sults for which no individual should take credit or be penalized. This 
condition should be recognized in any plan in which executive compen- 
sation is based upon results, else executives will from time to time be 
overpaid and underpaid. That the theory is weak is not offered as a 
reason for not using incentives for executives. It is mentioned so that 
a plan is not idly adopted, thus inviting the chance of yielding unde- 
sirable consequences to all concerned. 

All the foregoing methods of compensating executives result in 
taxable income. Since tax rates take a large part of such increases, there 
is a trend for the company to pay for a variety of expenses incurred by 
executives. The range of such payments or "fringe benefits" to execu- 
tives includes the following: 

1. Medical care 

2. Counsel and accountants to assist in legal, tax, and financial problems 

3. Facilities for entertaining customers and for dining 

4. Company recreational areas — golf course, swimming pool, and gymna- 
sium 

5. Membership fees in clubs and business associations 

6. Costs of education and development of executives; scholarships for chil- 
dren of employees; and business magazines and books. 3 

Such benefits are tax-free to the recipient. Were he to pay for them him- 
self out of salary, his income would have to be increased a minimum of 
30 per cent for lower-income executives and much higher for executives 
in the upper tax brackets. Obviously, this is a form of executive com- 
pensation that merits favorable consideration. 

2. Minor Executives. Most minor executives are paid on a salary 
basis, although incentive plans of one form or another are used in a 
minority of cases. The proponents of the salary plan expound the usual 

2 The favorable incidence of capital gains tax as opposed to the higher personal in- 
come tax is also important. 

3 Business Week, June 20, 1953, pp. 183-84. 



PLANS OF REMUNERATION 389 

claims for it and make the usual charges against incentive plans, which 
need not be repeated here. The discussion will be limited to a description 
of typical plans for incentive compensation of minor executives. 

Perhaps the oldest form of compensating supervisors and foremen 
upon a basis other than straight salary is that of paying them a bonus, 
depending upon the incentive earnings of their subordinates. For ex- 
ample, under the Gantt Plan (one of the early plans), provision was 
originally made for paying supervisors a bonus which increased as the 
number of subordinates who earned a bonus increased. And under some 
adoptions of the Halsey Plan, the supervisor shared in part of the time 
saved by his subordinates. Thus the employee received 66 2 A per cent 
of the time saved, and the supervisor, an indirect worker in the depart- 
ment, received the remaining 33 V3 per cent. In some installations of 
the Bedaux Plan, the supervisor receives 25 per cent of the B's saved. 
Such practices are commendable because they stress the fundamental 
responsibility of the supervisor — to help make the efforts of his work- 
ers more effective and economical. 

Another type of incentive plan is based directly upon departmental 
productivity or cost reductions. Under such plans, it is necessary to take 
the following steps: 

1. Define in quantitative terms the factors to be included in the plan 

2. Establish standards by which to measure varying degrees of success 

3. Establish a sliding scale of bonus percentages for increasing degrees of ac- 
complishing the factors specified in the plan 

For example, in simple outline, the plan of one company is based 
upon attainment of production schedules. This plan requires careful 
review of production standards, machine methods, and sales require- 
ments, so that extraneous factors will not affect the supervisors unfairly 
or too leniently. Then the schedule for each job during a particular 
period is set. Actual completion dates are then compared with scheduled 
dates, to arrive at a percentage of success. Supervisors receive a bonus 
depending upon their effectiveness in meeting schedules. This com- 
pany stresses meeting of schedules because delivery to customers is a 
prim factor in its success. 

In another plan, reduction in expenditures is the key to supervisory 
bonuses. A flexible budget is established for each department, depend- 
ing upon its expected rates of output. If actual expenses of a department 
are less than budgeted figures, the supervision receives a bonus varying 
with the percentage of saving. The emphasis upon cost reduction makes 
this plan appealing to the company. 



390 PERSONNEL MANAGEMENT 

Other plans of supervisory bonus payments are more complicated. 
For example, one company weighs the following factors in: 

1. Attainment of budgets 4. Efficiency in output 

2. Scrap reductions 5. Savings in materials used 

3. Direct laborsaving 6. Savings in maintenance costs 

Under this plan, standards are established for each of the foregoing 
factors, their relative importance is determined, and a scale of values 
for over-all achievement is established. The value of all this work, it 
must be noted, goes beyond the effect upon supervisory efficiency; it has 
the added value which careful planning brings forth. Although such 
plans may require a great deal of preliminary thought, the calculations 
a supervisor must make to compute his earnings can be simplified by 
preparing statistical tables from which foremen can, at a glance, deter- 
mine the bonus they have earned. 

RECORDS 

A significant problem in all wage plans is the effect they have upon 
record keeping. It has been noted from time to time that some plans 
aid the work of cost accounting, for example, whereas others are not so 
simple to handle. The same holds true for payroll computations. Hence 
plans should be weighed in terms of the effect they are likely to have 
upon the work of payroll computations. Of course, the whole problem 
of payroll calculation has been complicated by the extra records required 
by the Social Security Act, the Wages and Hours Law, and various de- 
ductions, such as "pay-as-you-go" federal income taxes and bond pur- 
chase plans. As a consequence, it is desirable to design forms that will 
make this work as speedy and economical as possible. Illustrative of 
practices that employ mechanical devices is the growing use of tabulat- 
ing card equipment. 

QUESTIONS AND PROBLEMS 

1. Differentiate between a wage plan, a wage incentive plan, and a job evalua- 
tion plan. 

2. Although the proposition that each operator should be permitted to earn as 
much as his capacities and abilities permit seems palpably apparent, much 
opposition may be found to wage incentive plans. Why? 

3. When a company uses a wage incentive plan, is there any need for non- 
financial incentives? Explain. 

4. What is the theory of wage plans in which wages increase at a ratio faster 
than output? 



PLANS OF REMUNERATION 391 

5. Prepare a table of comparison of wage plans by listing wage plans in the 
left-hand column and by listing the desirable characteristics at the top of 
successive columns. Then for each plan, opposite the characteristics, write in 
the words "yes" or "no" to indicate whether or not the plan possesses the 
characteristic What plan or plans are the best? 

6. Why is it desirable to compensate employees soon after they have earned 
a bonus? 

7. If a complicated wage plan is in use, why do employees not have confidence 
that the company is nevertheless being fair? 

8. During times when the purchasing power of the dollar is varying, how is it 
possible to build stability in a wage payment plan? 

9. In the case of operations in which the output of employees is largely con- 
trolled by machines or conveyors, what system of wage incentive, if any, 
would be desirable? 

10. With the advantages of the piecework plan so numerous, why is it viewed 
so often in such a poor light? 

11. If an increased percentage were used in calculating the portion of time saved 
for which an employee is to be paid, would it necessarily mean that the em- 
ployee would earn more? Explain. 

12. In what respects is the Bedaux Plan similar to the Halsey Plan? 

13. Since the 100 Per Cent Time-Saving Plan and the piecework plan give the 
same results to the employees, how would you determine which one to use 
in a given case? 

14. Assume that in a company operating in interstate commerce, a group of five 
employees earned a bonus of $74.40 during a given week. How much would 
each receive as his share, assuming the following facts? 

Hours Rate per 

Employee Worked Hour 

Smith 33 $1.20 

Jones 48 0.90 

Brown 42 0.95 

Roe 40 1.03 

White 44 0.96 

15. What is the essential factor that serves to explain why incentive plans are 
more difficult to establish in the case of such employees as salesmen and 
maintenance workers than production employees? 

16. For what factors, other than sales output, may a salesman be compensated? 

17. Are executive earnings of interest solely to the executives themselves? Are 
employees fair in being inquisitive about such matters? 

18. How would you determine what a fair salary is for the president of a com- 
pany? Indicate the factors to which you would give consideration. 

19. If profit-sharing plans and stock purchase plans find favorable usage among 
executives, why are they not equally good for operative employees? 

20. What voice should employees have in regard to the establishment of wage 
payment plans? 



CHAPTER 

Related Wage 
Problems 



20 



INTRODUCTION 

A number of matters related to remuneration have thus far been ig- 
nored which may now be given attention. These may be illustrated in 
terms of the following questions, to which some answers are now 
sought in this chapter: 

1. How is time related to wage and salary determination? 

2. What are the possibilities of guaranteeing wages? 

3. What contribution can sharing of revenues with employees contribute to 
the wage problem? 

TIME PROBLEMS 
VARIABLES 

How long should an employee work? This simple question involves 
numerous problems that are not easy to solve. For example, within the 
memory of many who are still working, the average workweek has de- 
creased from around seventy hours to forty hours. Some contend that a 
decrease to thirty-five, or even thirty hours, is justifiable. And the work- 
ing day has decreased from one of dawn to dusk to an average of eight 
hours, with some companies on a six-hour day. Then, too, such prac- 
tices as the five-day week, vacations with pay, rest periods during the 
working day, and reduced hours for female and child labor are relatively 
recent innovations that have not necessarily been standardized beyond 
change. 

As already suggested, the question of the work period resolves itself 
into a series of questions depending upon the particular time periods 
under consideration. The day, the week, and the year are major time 
periods, and each in turn raises problems. In the day interval, decisions 
must be reached regarding total hours to be worked, starting and stop- 
ping time, lunch hours, rest periods, and over-all time calculations. 
Within the week interval, there are matters of working days, shift 

392 



RELATED WAGE PROBLEMS 393 

changes, and paydays to be considered. And during the year, weeks to 
be worked, vacation periods, and holidays must be determined. 

How these matters should be resolved can easily be stated in prin- 
ciple. The length of working periods should be such that the maximum 
productivity is derived, at the least cost, with due regard to the health 
and welfare of the employees. Its application is something else again. 
As will be seen as particular time intervals are described, various in- 
terested groups are sometimes in violent disagreement among them- 
selves as well as with each other about the standards that should be 
adopted. Management, unions, employees, governmental agencies, and 
other groups have disputed and continue to dispute these matters ve- 
hemently from time to time. And it may be well to point out at the 
outset that no final solution is likely because the problems are affected, 
on the one hand, by social and political as well as economic conditions 
and, on the other, by the conflicting views which various groups bring 
to bear upon their solutions. 

DAILY TIME PROBLEMS 

At the present time, the eight-hour day is rather general throughout 
the United States. A number of companies exceed this figure, but only 
a small percentage work fewer hours. Ordinarily, when a day of less 
than eight hours is worked, it is usually due to the fact that no time 
out is taken for lunch — the employees eat while working. Thus a 
seven-and-one-half-hour day is found occasionally. A few companies 
have tried a six-hour day, usually in cases in which around-the-clock 
operations are desirable or necessary. This practice makes it possible for 
four shifts to be employed, each shift working six hours without a break 
for lunch. As the productivity of industry increases, there is no reason 
why the length of the working day may not be decreased to or below 
six hours, just as in the past it has been decreased from the fourteen- 
hour day once worked. 

1. Starting and Stopping Time. Although the length of the 
working day for particular classes of workers is usually the same in 
particular communities, considerable variation is found in other aspects 
of daily hours. For example, starting time in some companies is as 
early as 6:30 A.M. and in others as late as 9:30 A.M. Stopping times 
differ in like manner. These variations may be explained as follows: 

1. Some trades, such as service industries, must start earlier to be ready to 
meet the needs of other industries. 

2. Employee preference; in one company that asked its employees to note 
their wishes, a starting time of 7:00 A.M. was selected. 



394 PERSONNEL MANAGEMENT 

3. Staggered starting times are encouraged to permit transportation and 
restaurant services to handle loads without burdensome peaks. 

4. Tradition or growth without plan. 

Even within the same company starting and stopping times may 
differ for shop and office workers and sometimes between divisions of 
shop workers. This is done to prevent overlapping of various facilities 
and services or as a form of perquisite of office workers. Of course, 
maintenance workers usually have to arrive early to get the plant ready 
for operation. 

2. Lunch Periods. Lunch periods constitute another problem of 
daily working hours. Practice here is varied. As in the preceding in- 
stance, office workers often have a longer lunch period than shop work- 
ers. In their case, periods up to one and one-quarter hours are occasion- 
ally found, while an hour is the maximum for shop workers. Usually 
office workers are given forty-five or sixty minutes and shop workers 
thirty to forty-five minutes. In some plants lunch hours are staggered 
so that restaurant facilities need not be too large. While employees seem 
to prefer a shorter lunch period because their over-all working day is 
decreased, there is danger that sufficient time may not be available 
for getting back to work on time. Employees will then tend to "jump 
the gun" in starting their lunch period. In the event that this happens, 
supervision must be more alert, or the lunch period must be lengthened. 
A short lunch period may also result in the harmful practice of eating 
too hurriedly. 

3. Rest Periods. Whether or not rest periods should be provided 
constitutes another problem of daily working hours. Almost without 
exception, this practice has been found to have favorable effects — 
fatigue, loitering, visiting, accidents, and spoilage are reduced, and pro- 
ductive efficiency is increased. Breaks of eight to twelve minutes in the 
morning and again in the afternoon are found to be effective. Except 
where the nature of operations prevents, the only obstacle to the univer- 
sal adoption of this practice is the reluctance of employers to try it. 
They do not like to break with traditional practice, or they fear that 
employees will demand a shorter day instead of the rest periods. 

4. Over-All Working Day. And, finally, what constitutes the 
over-all working period must be defined for pay purposes. Ordinarily, 
the stated hours of starting and stopping constitute the limits of the 
working day. This must be understood by the employees, particularly 
where time clocks are used and employees must stamp their time cards 
on the clocks. In such instances, the cards will be punched before the 
starting time and after the stated stopping time by employees who are 



RELATED WAGE PROBLEMS 



395 



on time and do not quit early. The times as thus recorded are not used 
to calculate hours worked but to check an employee's on-time arrival 
and departure. For example, in the following case, the employee would 
be paid for eight hours of work and not for eight hours and twenty-one 
minutes: 





Stated Time 


Time Card Punched 




Starting 


Stopping 


In 


Out 


Morning 


8:00 
12:45 


12:00 

4:45 


7:52 
12:40 


12:01 


Afternoon 


4:47 



WEEKLY TIME PROBLEMS 

1. Total Hours a Week. The weekly time interval also raises a 
number of problems. First, there is the question of the total hours to 
be worked. During normal times the workweek in most companies is 
about forty hours. Of course, during peak periods the workweek is ex- 
tended. For example, War Manpower Commission directives required 
a forty-eight-hour workweek in many areas during World War II, al- 
though many companies exceeded this standard. Indeed, in one com- 
pany, at their own request, employees worked from seventy to eighty 
hours weekly. But before the war and after, the forty-hour week has 
been growing in favor. By following it, a five-day week, also growing 
in favor, can be adopted, and no overtime need be paid. 

During normal times, the overtime pay provisions of the Wages and 
Hours Law militate against a workweek of over forty hours. Obviously, 
a 50 per cent increase in labor costs will not be assumed unless offsetting 
reductions or customer demands warrant. During the war, on the other 
hand, it was a question of how long the workweek should be extended. 
The experience of the British seemed to indicate that a week of fifty-six 
to sixty hours was satisfactory, but that beyond this various losses out- 
weighed the gains. However, in this country, a forty-eight-hour work- 
week seemed to be best. Very likely, it will always be hard to determine 
what a workweek should be because of the effect of what employees be- 
come accustomed to. 

2. Working Days a Week. The number of days to be worked 
is also of importance in the weekly picture. The five-day week is gain- 
ing in popularity in the United States. Certainly, the evidence during 
World War II indicated that employees disliked the six-day week more 
than they did longer hours. Even the five-and-one-half-day week is dis- 
liked by those who once have the opportunity to try the five-day week. 
From the employer's point of view, the effectiveness of employees on 



396 PERSONNEL MANAGEMENT 

the half day is not always worth the cost. When the employer can be 
persuaded, therefore, that no significant loss of business will be incurred, 
he will close on Saturday. 

3. Shift Arrangements. Of course, when the nature of opera- 
tions or rush of business demands, the workweek may have to be ex- 
tended and extra shifts of workers employed. The matter of shifts has 
debatable alternatives. Beyond mentioning the alternatives, space here 
does not permit a statement of the advantages and disadvantages of 
each. The matter of shifts may be handled in the following ways: 

1. Each group of employees is set permanently in a given shift position. 

2. Each group rotates shift positions, at weekly, monthly, or other periods. 

YEARLY TIME PROBLEMS 

In the yearly interval, the major problems revolve about holidays 
and vacation periods. There is a discernible trend toward paying shop, as 
well as office, workers for holidays. Hence, what holidays will be recog- 
nized should be specifically stated. Even when pay for holidays is not 
granted, holidays may be important because many companies pay time 
and one-half or even double time to those who have to work on these 
days. To avoid possible arguments about premium days, therefore, these 
days should be established in advance. Since absenteeism after holidays 
by those who worked on and received double time for holidays is exces- 
sive, one company reduced this by providing that pay would be calcu- 
lated at straight rather than double rates for holidays in the event of 
unexcused absences following them. 

Vacation periods are also of growing importance since more and 
more companies are granting vacations with pay (because of collective 
bargaining in many instances) to shop as well as office workers. Two 
problems must be decided here: first, the length of vacations, and sec- 
ond, the time of taking vacations. Office workers generally get two 
and in a few instances three weeks, and shop workers get one or two 
(very rarely three) weeks, depending upon seniority. All vacations may 
be taken at the same time, which has the advantage of avoiding conflicts 
about vacation selection and the need of replacing key employees. Or 
they may be staggered, so that business can be conducted as usual right 
through the year. Which plan should be used may be determined by 
checking in a particular case the advantages and disadvantages in the 
list provided in Figure 73. 

PORTAL-TO-PORTAL ISSUES 

Reaching one's assigned station and departing from it have con- 
sumed enough time that the matter became a serious problem, leading 



RELATED WAGE PROBLEMS 



397 



to the passage of the Portal-to-Portal Act of 1947, the provisions of 
which have been incorporated in the revisions made in 1949 in the 
Wages and Hours Law. The events leading to the passage of this act 
are worth reciting before the important aspects of the Act are noted. 



FIGURE 73. Comparing Vacations Plans* 



MASS VACATIONS 



STAGGERED VACATIONS 



ADVANTAGES 



□ Using the slack season to close the plant for 
paid vacation period can help avoid the un- 
pleasantness of seasonal layoffs. Especially useful for 
highly seasonal industries. 



□ 



Capacity operation is easier for 50 weeks of the 
year. Efficiency isn't cut by vacation absences. 



□ Extensive repairs, equipment installation, and 
inventory taking can be done during the vaca- 
tion without slowing output or causing lay-offs. 

□ It's easier to schedule work. There's no more 

need to keep making allowance for employees 

away on vacation. So every department's output is 
easier to predict. 

□ All workers are treated the same. This simpli- 
fies the foreman's job of scheduling vacations, 
and the accounting department's job of issuing vaca- 
tion pay. It also stops complaints that "Bill got his 
vacation in July, why must I take mine in May?" 



□ Continuous deliveries to regular customers, and 
all normal services, are possible the year around. 
Interruption might play into competitors' hands. 

□ New orders can be accepted at all times and 
completed on schedule. A maker of cardboard 
boxes could take a rush order any time, give it 
priority (or overtime) and complete it even with 20% 
of his force on vacation. 

□ Rapid processing of perishable goods on hand 
is assured. Continuous manufacturing would 
prevent spoilage of goods. 

□ Employees have a wider choice of vacation 
time. Those who want to take their time off 
during the hunting or fishing season — or in the winter 
—can be accommodated. 

□ Good community relations are preserved. The 
load on recreational and travel facilities is 
spread more evenly. 



DISADVANTAGES 



□ 



The expense of closing the plant down and of 
reopening it two weeks later may be high. 



□ Some maintenance operations and routine serv- 
ices must be kept going even while the plant 
is closed. Don't forget their cost. 



□ 



You might miss some business. And some cus- 
tomers may be inconvenienced. 



□ New employees not eligible for vacations will 
lose income during the shutdown — unless you 
can find work for them in the plant. 



□ 
□ 



Some employees may be eligible for longer 
vacations than the shutdown period. 

Vacation facilities may be overloaded in the 

area if too many employees are off at once. 



□ 



Production may slow down because of opera- 
tion with a reduced labor force. 



□ Bottlenecks may be created by the absence of 
even a few people — particularly in small plants 
or in departments with small staffs where the effect 
of absences is felt more strongly. 

□ Poorer supervision and short-range planning 
may result when an assistant takes over during 
the key man's vacation. 



□ 



Work may pile up for specialists, who will then 
have a heavier-than-ever load when they return. 



□ Employees may not like to have vacation pe- 
riods fixed for them. It's tougher to tie in with 
plans of relatives or friends — or with game seasons. 



□ Resentment and friction may arise among em- 
ployees if too many want off at the same time. 
Since it is impossible to satisfy all requests, manage- 
ment is forced to refuse some. 

□ Costs can run high for training temporary re- 
placements and for overtime work made neces- 
sary by vacation cuts in the work force. 



128 



* Source: J. B. Bennet, "Vacations— Mass or Staggered," Factory Management and Maintenance, June, 1950, 



Several years ago the coal miners won an important concession from 
the coal operators when the latter agreed to pay miners for the time 
they spent traveling to and from work on the mine premises. Thus, from 
the time a miner entered the portal of a mine until he reached the coal 
vein — and the return later — was time-consuming. For this time, the 
miners now received compensation. Upon the conclusion of this union 
contract, unions in manufacturing industries set out to ascertain whether 



398 PERSONNEL MANAGEMENT . 

or not traveling time in their cases was a subject worthy of collective 
bargaining. And some wondered whether or not such traveling time 
should have been paid for under the Wages and Hours Law. A suit was 
instituted (which reached the Supreme Court and became the now fa- 
mous Mt. Clemens Case) that ruled that walking time between the 
plant gate and time of certain make-ready activities must be included for 
purposes of computing overtime. 

This ruling let loose suits to collect back pay and liquidated damages 
that amounted to five to six billions of dollars. Because the suits might 
have ruined many businesses that had honestly obeyed wages and hours 
regulations and because the wages and hours rules were uncertain re- 
garding going to and from work, Congress passed the Portal-to-Portal 
Pay Act of 1947. This Act specifically outlawed the suits, except those 
in which portal-to-portal activities are covered by contracts or existing 
practice. 

As for compensable activities, this Act specifically excludes the time 
an employee spends going to a workplace, starting his "principal ac- 
tivity," and returning from the workplace. Thus such activities as go- 
ing to work, reaching one's station, checking in and out, washing, 
changing clothes, and getting one's pay check are not compensable. 
However, if any of the foregoing is not for the convenience of the 
worker but is really an integral part of one's job, they are compensable. 

More specifically, activities compensable as part of an employee's 
principal activity include: 

1. Waiting to begin or resume work for reasons beyond an employee's con- 
trol — such as waiting for materials 

2. Getting instructions before going on a shift, or getting materials 

3. Remaining on call on the employer's premises, where the employee is not 
free to leave the plant (except for scheduled sleeping time) 

4. Preparing reports required by the job 

5. Getting medical attention during working hours 

6. Eating meals where the employee must remain at his working post 

7. Rest periods under twenty minutes 

8. Time spent in handling grievances, under an established plan in effect 
in the company 

9. Attending business conferences or schools in connection with work duties 

STABILIZATION PROGRAMS 

Employees are interested not only in fair wages but also in unin- 
terrupted wage opportunities. Unfortunately, various seasonal and cy- 
clical disturbances disrupt continued earning power. Many believe that 



RELATED WAGE PROBLEMS 399 

nothing much can be done to secure employees against such risks. Yet a 
number of programs have been devised to provide some degree of pro- 
tection against such losses of income. 

This is not the place to debate the issue of income stabilization. All 
that can be done here is to note what has been done by industry and 
government in this respect. The programs fall into two major cate- 
gories: 

1. Job stabilization, which seeks to provide continuous work opportunities 
and thereby assures employees of steady earnings, and 

2. Wage stabilization, which provides steady wage payments, whether or 
not employees are actually working. 

JOB STABILIZATION 

To all concerned, stabilization of jobs would be a real boon. The 
employer seeks job stability because it leads to production efficiency, 
which means, in turn, that excess capacity, with its high costs, can be 
reduced to a minimum. And to employees the assurance of steady em- 
ployment is of real significance, dependent as they are on a steady source 
of income. Unfortunately, cyclical and seasonal fluctuations are formid- 
able obstacles to, these hopes. The effect of these fluctuations must be 
reduced or removed, if possible, if stabilization of jobs is to be attained. 
Attempts to do this may be classified as follows: 

1. By individual companies 

a) By adoption of sales policies that stabilize production 

b) By adoption of production policies that stabilize production 

c) By adoption of personnel policies that stabilize production 

2. By intercompany co-operation in regard to — 

a) Sales practices 

b ) Production practices 

c) Personnel practices 

3. By governmental regulation and assistance 

a) Unemployment compensation regulations 

b) Assistance of employment services 

c) Assistance of informational service 

INDIVIDUAL PLANS 

The basic question a company must answer when considering job 
stabilization is: Is the program worth the cost? Although it has been 
contended that such is the case, nevertheless any proposals offered by 
the personnel department should carry schedules of, first, losses due to 
job fluctuations; second, costs of programs aimed at reducing fluctua- 
tions; and, third, the gains to be derived therefrom. To make such esti- 



400 PERSONNEL MANAGEMENT 

mates, it is first necessary to examine statistically the seasonal and cycli- 
cal fluctuations that have and are likely to beset the company. Only 
after this has been done, can the size of the stabilization job be appre- 
ciated and the desirability and flexibility of alternative plans for solving 
it be considered. 

Most job stabilization programs start with sales policies, since any- 
thing which will stabilize sales will obviously stabilize production and 
hence jobs. Reappraisals of sales policies fall into two groups — those 
which correct unstabilizing company practices and those which seek to 
make customers purchase in a more consistent manner. 

Much can be done by companies themselves to eliminate practices 
that tend to unstabilize sales. Unplanned sales programs and activities 
are cases in point. In many instances, salesmen receive no instructions 
regarding products to be pushed, types of sales to be avoided, or what 
promises may be given on shipping dates. As a consequence, produc- 
tion bulges are extended or opportunities to fill in production valleys 
are missed. All this suggests that a simple and early step toward job 
stabilization can be taken by developing and adhering to planned se- 
lective sales programs. 

Further positive steps can be taken by devising sales policies that 
work on the customer so that he becomes a more "stabilized" buyer. On 
the one hand, sales practices should be established under which sporadic 
buying is discouraged. For example, pricing policies should be set so 
that fear of price changes will not induce overbuying or underbuying. 
During periods when prices are falling, buyers tend to hold off in order 
to take advantage of still lower prices and to avoid inventory losses. In 
such instances, a policy of guaranteeing buyers against price declines 
will tend to induce more consistent purchases. Another good example 
is that of using special sales at times when they will coincide with pe- 
riods when production is expected to be at low levels. The urge to buy 
should be sharpened by keeping the number of such sales at a minimum. 

On the other hand, customers should be induced to become more 
stable buyers. First, in the case of seasonal items, buyers may be en- 
couraged to send in advance orders by allowing special discounts, guar- 
anteeing against price declines, offering exclusive rights of distribution, 
offering exclusive selection of styles, and permitting purchase on con- 
signment. Second, in the case of items that are being ordered in small 
lots, buyers may be induced by methods suggested above to place a large 
order, with deliveries to be made periodically. And, third, by inducing 
the ultimate consumer to use, the year around, items that he is using 
only at certain seasons, all the distributors back to the manufacturer will 



RELATED WAGE PROBLEMS 401 

tend to become more stable buyers. Perhaps no better example of suc- 
cess in this regard can be found than that of sellers of soft drinks, who 
market almost as much of their product in winter as they do in summer 
months. 

PRODUCTION POLICIES 

Production practices and policies should also be studied with a view 
to stabilizing employment. One of the most useful practices in this re- 
spect is that of producing to stock during seasons of low sales. This is 
not a cure-all because it is not universally feasible. When the following 
conditions prevail, its use should be given favorable consideration: 

1. Parts or products can be stored — 

a) With a minimum of loss due to deterioration or evaporation 

b ) At a minimum cost of handling, storing, and financial investment 

2. Minimum losses will be incurred because of — 

a) Style changes while goods are stored 

b ) Declines in price during storage 

Such products as locomotives and construction equipment fall out- 
side this class because of the physical problems of storing and the 
cost of carrying the items. On the other hand, many consumer items, 
which are regularly purchased, can be stored within the foregoing re- 
quirements. 

Another practice which has much to commend it is that of "dove- 
tailing" or producing different items for different seasons. This is usu- 
ally difficult from a production point of view because facilities that are 
economical for the production of one type of product are ordinarily 
uneconomical for others. However, diversification should be considered 
because it may provide a way to balance production. Ordinarily, the less 
specialized the equipment a company uses, the more feasible is dove- 
tailing or diversification of product. The food and clothing industries 
have scored substantial successes in this regard. 

A variety of other production practices has been devised with a 
view to stabilizing production. Production control methods, for ex- 
ample, have much to offer here. Available work may be routed and 
scheduled to provide a stable work load. Another practice that has de- 
sirable features in this connection is to defer work of certain kinds to 
slack periods. Maintenance work, construction jobs, and scrap handling 
are cases in point. Another useful idea is to design products so that 
various parts are interchangeable irrespective of exterior style or varia- 
tions in size. In that way, sales of particular products may fluctuate, yet 
production can be stabilized by producing to stock, if need be, or by 



402 PERSONNEL MANAGEMENT 

producing to a plan of production control that has, so far as the work- 
ers are concerned, removed some of the vagaries of size or style factors. 
And, finally, a close tie-in of production and sales efforts should be de- 
veloped so that both are directed toward the same goals. 

PERSONNEL PRACTICES 

Job stabilization may also be favorably affected by planned person- 
nel practices. More accurate analysis of labor requirements, develop- 
ment of versatility of employees, and planned placement of work loads 
are the major ways in which this may be done. 

1. Stabilizing Hiring PracticeSo Lack of information regard- 
ing labor needs and hiring is a major cause of instability. When such 
poor employment practices are permitted, foremen in departments in 
which work loads are increasing will hire extra labor to handle this, not 
knowing that the load is temporary and that layoffs will soon be in 
order. Even when it is known that work loads are temporary, some com- 
panies proceed to hire willy-nilly, not caring about the disturbing influ- 
ence to the labor situation. If, then, job stability is a desirable goal, the 
first and easiest step that any company can take in attaining it is to fore- 
cast the labor requirements as accurately as possible and, on the basis of 
this, to lay down stabilizing rules of hiring. Indiscriminate, inconsistent, 
and temporary hirings may then be reduced to a minimum. 

2. Developing Versatility. The development of versatility in 
workers also has much to be said for it because varying work loads then 
can be handled by a smaller number of employees. The theory of this 
practice is that workers who are kept on the payroll can be shifted, with 
a minimum loss of effectiveness, from jobs on which output is falling 
to those on which output is increasing. This makes it unnecessary to 
hire one worker for the first job, lay him off, and then hire another 
specialist for the second job, who in turn would have to be laid off when 
work loads in that area decline. This solution may not help the total 
unemployment problem, but it does provide job security to employees 
who meet the versatility requirement. 

Versatility may be attained in two major ways — selection and train- 
ing. Most companies, in hiring, seek an employee to fill a particular 
vacancy. As a consequence, they tend to select the candidate who is best 
suited to do the required job but who has no other aptitudes or skills, 
instead of looking for a candidate who has all-around abilities. If the 
latter course is followed, the employee selected can be shifted to other 
jobs, as work loads require, thus adding a link to the chain of job se- 



RELATED WAGE PROBLEMS 403 

curity. Under the former plan, however, specialized workers must be 
laid off if the general efficiency and ultimately the ability of the com- 
pany to hire anyone are to be maintained. 

Training of workers is a highly desirable practice because it may 
lead to the development of versatility, to increase in present efficiency, 
and to the development of satisfaction of employees in their work. To 
be effective, the training program must be designed so that current em- 
ployees are given opportunity to learn basic techniques and methods of 
allied jobs. Moreover, it must be started and continued far enough in 
advance of actual need to allow employees time to gain new and added 
skills. For best results, the objectives of job security should also be 
stressed throughout the various training courses. 

3. Leveling Work Loads A third important way of stabilizing 
jobs by means of personnel practices is to level work loads. For ex- 
ample, hours of work may be adjusted so that available work is shared 
by all employees. Such flexibility of hours must be tied in with sales 
and production practices. On the one hand, customers may have to be 
willing to accept shipment delays; and, on the other, changes in produc- 
tion schedules to meet current conditions must not be unduly difficult 
to make. 

If these things can readily be done, adjustment of hours is a possible 
means of job stabilization. Ordinarily, it will be practicable, on the 
downward side of the business cycle, so long as reductions in hours of 
work do not reach the point at which all workers are on "starvation'' 
wages. When this point is reached (what it is, is a variable depending 
upon employee opinion and standards of living), employees with sen- 
iority lose their desire to share the work with the younger employees 
and insist that the latter be released. On the upward side, taking care 
of peak loads by means of overtime, without hiring extra workers who 
must before long be laid off, depends upon the willingness of em- 
ployees to give up their leisure and upon their efficiency as the factor of 
fatigue takes effect. However, within the practicable limits, adjustment 
of hours is a simple way of stabilizing jobs. 

A good system of transfers is also effective in this regard. If work 
loads of varying amount are scheduled in different departments at dif- 
ferent times, transfer programs can be worked out so that employees 
may be shifted between departments without need for layoffs. This 
practice can be adopted, however, only if, in addition to the require- 
ments of sales and production tie-ups suggested in the preceding para- 
graph, employees possess versatility. 



404 PERSONNEL MANAGEMENT 



INTERCOMPANY CO-OPERATION 



In a competitive society, no one company can install practices, the 
cost of which will place it in an unfavorable position as compared to 
other firms. Job security is a goal, the attainment of which involves 
some practices that, if adopted, call for intercompany action to be suc- 
cessful. Great progress in this direction has been made by a number of 
groups. Favorable results have been achieved by such groups as local 
and state chambers of commerce acting in behalf of their areas, trade 
associations working for the benefit of particular industries, and na- 
tional business associations such as the National Association of Manu- 
facturers and the more loosely knit Committee of Economic Develop- 
ment, acting for the benefit of all businesses. Such diverse groups as 
the American Legion, church bodies, and unions have also interested 
themselves in ways and means of stabilizing jobs. 

A variety of sales, production, and personnel practices have been de- 
veloped on an intercompany basis. Perhaps the most important con- 
tribution in this respect is the collection and dissemination of various 
types of information. Certainly information on such subjects as inven- 
tory positions, buying potentials and trends in various markets, new 
developments of materials and machines, trends in employment, and 
price fluctuations is highly useful in keeping employers from making 
mistakes that lead to overemployment or underemployment and the in- 
evitable layoffs. Intercompany co-operation in gathering such informa- 
tion may be obtained through their own bureaus of information or out- 
side bureaus subsidized to carry on this work. 

In addition to the contributions to the ability of individual compa- 
nies to make better decisions which aid in stabilizing production, inter- 
company co-operation can lead to the elimination of unstabilizing prac- 
tices. For example, fluctuation of output in the automobile industry has 
been reduced by changing the time of introducing new models from the 
spring to the fall of the year. And the agreement of various industries 
to avoid extravagant claims, excessive discounts, and high-pressure sales- 
manship has tended to reduce unsettling results in the market and, thus, 
in turn, to stabilize employment. More positive action has been taken by 
industries that have sought on a co-operative basis to educate customers 
in more stable buying and selling methods. 

An intercompany practice which has been successful in stabilizing 
production is that of interchanging workers as slack periods develop in 
one company while a peak load must be carried by another. Of course, 
such interchanges are the responsibility of workers in most markets, but 



RELATED WAGE PROBLEMS 405 

the results of individual search are not always satisfactory to the work- 
ers, nor do the companies always get back desirable workers. When 
companies in a community get together to discuss their work loads, 
however, employees may be shifted from company to company with a 
minimum of lost time and effort to the employees. Some interesting 
problems, such as effect upon seniority, must be worked out; but their 
solution seems to be a small price to pay compared to the losses that 
are avoided thereby. 

GOVERNMENTAL INFLUENCES 

Job stabilization has also been influenced by governmental regula- 
tion and assistance. Regulatory influences have come chiefly from the 
Wages and Hours Law and the unemployment compensation laws, 
while the work of such agencies as the employment service and the De- 
partments of Commerce and Labor has been of an assisting nature. 

1. The Wages and Hours Law. As noted in earlier chapters, 
one of the fundamental purposes of the Fair Labor Standards Act is to 
encourage the sharing of available work by penalizing employers who 
work their employees more than forty hours a week. Obviously, an 
employer who has to increase his labor costs by 50 per cent for over- 
time will consider very seriously the advisability of hiring additional 
workers. If he does, then the objective of stabilizing employment in the 
over-all sense by reducing unemployment will be attained. 

More direct encouragement of employment stabilization is also pro- 
vided by the exemptions from overtime payments granted to companies 
that establish employment guarantees by collective agreement. Section 
7 ( b ) of the Act provides as follows : 

No employer shall be deemed to have violated subsection ( a ) by employing 
any employee for a work week in excess of that specified in such subsection with- 
out paying the compensation for overtime employment prescribed therein if such 
employee is so employed — 

1. In pursuance of an agreement, made as a result of collective bargaining 
by representatives of employees certified as bona fide by the National 
Labor Relations Board, which provides that no employee shall be em- 
ployed more than one thousand hours during any period of twenty-six 
consecutive weeks. 

2. On an annual basis in pursuance of agreement with his employer, made 
as a result of collective bargaining by representatives of employees cer- 
tified as bona fide by the National Labor Relations Board, which provides 
that the employee shall not be employed more than two thousand hours 
during any period of fifty-two consecutive weeks or 

3. For a period or periods of not more than fourteen work weeks in the ag- 



406 PERSONNEL MANAGEMENT 

gregate in any calendar year in an industry found by the Administrator to 
be of a seasonal nature, and if such employee receives compensation for 
employment in excess of twelve hours in any workday, or for employment 
in excess of fifty-eight hours in any work week, as the case may be, 
at a rate not less than one and one-half times the regular rate at which he 
is employed,, 

Interpretations by the Administrator of the Act make some adjust- 
ments in these hours to 2,080 in the case of annual agreements. 

2. The Social Security Act. Another encouragement to sta- 
bilized employment stems from the unemployment compensation pro- 
visions of the Social Security Act. Under Titles III and IX of this Act, 
employees of industry, in states that have approved plans, are com- 
pensated for periods up to twenty-six weeks, depending upon the legis- 
lation of the states in which they reside. The funds for compensation are 
obtained by taxes computed as a percentage of individual payrolls. 
Records are kept of the contributions of each company and of compensa- 
tion paid out against the individual accounts. In most states adjustments 
are made in the taxation for particular companies if the withdrawals 
from the fund, because of a low record of layoffs, are at a minimum. 
The amount of the adjustments depends upon the system of "merit" or 
"experience" rating which particular states have adopted. Obviously, 
it is to the benefit of companies operating in states in which rating may 
lead to reduction in taxes to reduce fluctuations in employment when- 
ever possible. 

3. Assistance of Federal Agencies. Other federal agencies 
have lent an assisting hand in reducing job instability. The Department 
of Commerce and the Department of Labor have collected a variety of 
data which is useful to employers in reaching more intelligent decisions 
regarding business problems, thereby reducing mistakes that lead to 
layoffs and employment fluctuations. Also, the United States Employ- 
ment Service and the state employment services assist employers in the 
selection of workers who are better suited to their jobs; consequently, 
layoffs due to misplacements are reduced. 

WAGE STABILIZATION 
SCOPE OF PLANS 

Programs of wage stabilization are based on the proposition that 
wages and salaries should be continued at a more or less constant rate 
when it is impossible to stabilize production. A variety of such plans 
have been developed. The key points of difference pertain to: 



RELATED WAGE PROBLEMS 407 

1. The employees covered by guarantees 

2. Guarantee periods and amounts 

3. Voluntary versus negotiated programs 

These variables are discussed in this section. In addition, examples will 
be given of a number of stabilization programs, and then attention will 
be directed to governmental activities in this area. 

EMPLOYEE COVERAGE 

Most plans are limited to certain classes of workers. Length of 
service, type of work, and a calculated number of employees are used 
to establish limits. Length of service is undoubtedly the most popular 
method for determining the employees who are to participate in wage 
stabilization plans. It is, of course, easy to calculate and understand 
and, moreover, has the actual advantage of the test of time — since 
the company has been able to retain them for a length of time, prob- 
abilities are in favor of being able to continue their employment. The 
service requirements of some plans are as low as six months and as 
high as five years, with a period of one year being favored. 

Job classes are also used by some companies because the retention 
of employees on certain key jobs is highly desirable. Technical, pro- 
fessional, supervisory, and maintenance employees are examples of 
those to whom guarantees are extended. 

And, finally, some companies establish the number of employees to 
whom guarantees can be extended by calculating labor requirements 
for a future period of time. After this figure is determined, seniority 
by job classes is then employed to determine which of the employees 
will be included in the number of employees to whom the guarantee 
can be extended. This method has the advantage of protecting the 
company against excessive guarantees, but it has the disadvantage of 
making some key employees uncertain about income stability. 

GUARANTEE PERIODS AND AMOUNTS 

All plans establish a definite period of time during which guarantees 
apply or are calculated. In most instances, the year is the base period, 
although some plans limit the time to as low as three months. Obvi- 
ously, if a plan is to give employees assurance of steady income, they 
should at least aim toward the annual basis. This does provide a suffi- 
ciently extended period so that employees are not disturbed by what is 
going to happen to their income in the near future. Of course, from 
the company's point of view, guarantees beyond a year's time are full 
of danger because economic conditions and prices beyond its control 



408 PERSONNEL MANAGEMENT . 

and its powers of foresight may lead to impossible financial burdens. 
However, most companies should be able to forecast within reasonable 
limits of accuracy the sales it will make during a year's time and, hence, 
be able to establish this period as a limit to its guarantees. 

Although questions of who is to be covered for how long may be 
answered with relative ease, how much is to be guaranteed is a much 
more difficult question. The variations in this regard in actual practice 
show that differences of opinion are wide. Guarantees differ in terms 
of liability of payments and amount of payment. 

With rare exceptions, most companies limit their guarantees or 
establish rules for counterbalancing overpayments or underpayments. 
A common way of doing this is to establish a basic workweek and a 
basic pay check for each week. If the actual earnings of employees are 
less than the basic check, the differences are recorded and must be 
made up in future weeks when overtime hours raise actual earnings 
above the basic check. The basic pay check may be based upon a 
standard work week of forty hours (or upon some lesser figure) if 
actual hours from week to week fluctuate around forty. If the period 
within which shortages must be made up is definitely stated, let us say 
a year, as some plans provide, then the liability of employers is min- 
imized, yet the wage plan may be termed a 'guaranteed wage plan." 

Many companies limit their liability by agreeing to advance em- 
ployees, for specified periods of time only, an amount sufficient to 
make up the difference between the amount earned and the guaranteed 
weekly pay check. These advances are continued only for a limited 
period of time or up to the pay for a given number of hours. Should 
these limits be reached, the make-ups are stopped. And, as noted 
earlier, the advances must be made up by the employee when work 
weeks exceed the basic week or some percentage of a basic week. To 
minimize the losses that may develop if long periods intervene before 
work periods are sufficient to warrant repayments by employees, these 
plans are usually restricted to employees of specified seniority. 

NEGOTIATED PLANS 

The foregoing plans have been voluntarily promoted by industry 
itself. There is a growing movement on the part of unions to drive for 
wage guarantees. The large national unions are forcing the issue in 
current negotiations. It is not improbable that gains will be made on 
a broad scale. 

A number of contracts have already been signed incorporating such 
guarantees. Thus far they provide a given number of high-seniority em- 



RELATED WAGE PROBLEMS 409 

ployees — not all employees — with assurance of 40 hours of work for 
50 weeks in a given year. In some instances, payment must be made, 
even though unemployment is caused by lack of materials brought on 
by a strike of employees of suppliers. The employees also have the right 
to respect — without a pay loss — picket lines of other unions. Nor is 
overtime counted against the hours guaranteed annually. 

How far this movement wil go is conjectural. Guaranteed wages 
have an appeal, however, that is difficult to resist. And it must be 
granted that most companies never have laid off all their employees at 
any time. At least, guarantees of this amount could be feasible. So it is 
safe to conclude that negotiations for such guarantees are not likely to 
abate. How many employees will be covered and the extent of guaran- 
tees will depend upon economic conditions, type of industry, strength 
of union bargaining power, strategy of union drives, and the facts that 
management can marshall about its industrial situation. 

EXAMPLES OF WAGE PLANS 

A number of companies are widely recognized for their contributions 
to wage stabilization programs, and a brief description of their plans is 
in order. 

Procter and Gamble, for example, has been a pioneer in this field. 
Their plan is essentially an employment guarantee plan. Permanent 
factory workers are guaranteed employment for at least forty-eight 
weeks of the year. To make this plan feasible, the company had, first, 
to redesign certain key manufacturing operations so that year-round 
instead of seasonal operations could be carried on and, second, to 
revamp their distribution methods so that retailers purchased on a 
periodic rather than a casual basis. The work guarantees are given to 
employees with two or more years of consecutive service. Workers 
also are subject to job changes as work loads of various divisions dictate. 

The Nunn-Bush Company, noted for its plan of fifty-two checks a 
year, is another pioneer in wage stabilization. This company, too, has 
worked out very carefully the conditions under which wage guarantees 
can be made. It has found that the amount that can be paid to em- 
ployees is about 20 per cent of the value of production. Hence, by 
forecasting sales for any year, it can determine what its payroll will 
be. Jobs throughout the company have been evaluated, and each em- 
ployee included in the plan may draw one fifty-second of his annual 
rate each week. At the end of four-week periods, adjustments are 
made if actual earnings are above or below drawings. Only workers 
who are in an "A" group, consisting of those whose seniority and 



410 PERSONNEL MANAGEMENT 

ability merit, are included in this weekly pay check plan; the other or 
"B" workers are paid on an hourly basis without any guarantees. The 
guarantees in this case are not a fixed amount but a fixed percentage 
of whatever business the company gets. 

The Hormel Company of Austin, Minnesota, has also been in the 
vanguard of the movement for wage stabilization. Employees receive 52 
pay checks a year, with a minimum of 38 hours at the hourly rate in any 
week. In weeks of over 40 hours, no overtime at premium rates is paid. 
Overages and underages are balanced at periodic intervals. At the end of 
the year employees earn bonuses based upon the earnings of the com- 
pany and for production in excess of estimated quantities. Thus this plan 
includes a profit-sharing feature. 

The elements of a few other companies that illustrate some varia- 
tions in practice are also worth citing as follows: 

The William Wrigley, Jr., Company pays a percentage of regular 
earnings to employees laid off. Payment is made to employees of six 
months' service, or more, and continues for four to thirty weeks, depend- 
ing upon service. 

The Armstrong Cork Company will make up the pay of employees 
up to forty-eight hours for any two weeks at its own expense and will 
prepay wages between 60 per cent of standard earnings and actual 
earnings, which difference must subsequently be repaid by the workers. 

The Sears, Roebuck and Company plan pays its employees a regular 
weekly amount fifty-two weeks a year, requiring workers to work what- 
ever number of hours, up to but not beyond reasonable limits, needed 
to get the work done. Earnings in excess of weekly guarantees during 
the year are paid to employees. Payments in excess of earnings are ab- 
sorbed as a loss by the company. 

CONDITIONS OF FEASIBLE USAGE 

Wage stabilization requires favorable conditions. Desirable though 
it may be to employees and employers, it is not something that can be 
established or not, as the whim dictates. To begin with, wage stabiliza- 
tion is practically limited to periods of a year or less. Hence, as a 
stabilization of cyclical forces, it is an aid, not a cure-all. And even 
within the yearly or seasonal period, many companies are unable to 
do much about wage stabilization. For example, those whose swings 
of business are violent and unpredictable — the so-called "producer- 
goods industries" are a case in point — cannot undertake such programs. 

On the other hand, those whose business is in the consumer-goods 
field and are more or less "depression-proof" (meaning more resistant 



RELATED WAGE PROBLEMS All 

than others) may adopt such plans. A review of the names of com- 
panies that have installed them soon indicates the predominance of 
consumer-type industries. And, finally, industries which can economi- 
cally store parts or finished products are in a better position to stabilize 
wages than others. Thus anything that a company can do to reduce 
seasonal fluctuations, to increase storability of products, and to increase 
the versatility of employees makes wage stabilization more feasible. 

The variations in these conditions explain why some companies can 
be more liberal in their guarantees than others. Whereas some can 
guarantee weekly pay checks of fixed amount without repayment fea- 
tures in the event of overpayments, others must restrict their guarantees 
to little more than wage advances that must sooner or later be repaid. 
In any event, the steps taken by any company in this direction serve to 
reduce one of the most serious threats to labor's security and peace of 
mind. 

UNEMPLOYMENT COMPENSATION 

The federal government, through the Social Security Act, has taken 
steps to stabilize income. Through the sections of this Act that pertain 
to unemployment, employees who reside in states with approved legis- 
lation and machinery may receive compensation of varying amounts. 
The amounts that eligible unemployed workers may receive varies from 
state to state. As an example of the factors covered by such laws, the 
following provisions in the state of Ohio are of interest: 

1. The amount of compensation for totally unemployed is one-half of the 
normal, average weekly wage, but not to exceed $25.00 per week, up to 
26 weeks in any 52-week period, after a waiting period of 3 weeks; and 
up to $5.00 for dependent children. 

2. The amount for partially unemployed, provided that earnings fall below 
60 per cent of normal earnings, is computed on a sliding scale of from 10 
to 40 per cent of normal earnings. 

3. To be eligible, unemployed must — 

a) Have worked in jobs not exempted from coverage 

( A few examples of exempted classes are — agricultural labor, employ- 
ees of governmental agencies, domestic service, and "extra" workers.) 

b) Have worked in each of 20 weeks in the year before application is 
made for benefits, for an employer of 3 or more persons 

c) Have registered with the employment service 

d) Be able and willing to work 

e) Have earned at least $240 during the base period 

Obviously, this program does not establish wage stabilization. It 
does provide a buffer while unemployed are looking for work. More- 



412 PERSONNEL MANAGEMENT • 

over, it indicates the type of program that government may be asked 
to expand, as some already are demanding, if periods of unemployment 
should become severe. 



PROGRAMS OF REVENUE PARTICIPATION 

A final group of programs related to wages is characterized by some 
form of sharing in profits or revenues. These programs include, first, 
direct profit sharing; second, sharing through stock ownership; and, 
third, sharing through royalty provisions. 

PROFIT SHARING 

A reawakening of interest in sharing of profits took place during 
the years of World War II when some companies sought to use it as a 
means of granting wage increases that were otherwise prohibited by 
war controls. Also during the war there was considerable discussion 
of providing reduced rates of income tax for companies that had ap- 
proved profit-sharing plans. Labor unions, too, in some cases have come 
out with demands that profits be shared with employees. And, of 
course, some employers have felt that profit sharing is a highly desirable 
means of solidifying relations with employees by making them con- 
scious of their partnership stake in the success of the business. 

1. Computing and Allocating Shares. Profit-sharing plans 
differ largely in terms of how shares going to labor and capital are to 
be computed and the method of administering the plan. Looking first 
at the division of profits, the simplest plan is to establish the set per- 
centages that will go to capital and to labor and then to determine the 
basis upon which labor's share will be allocated among eligible workers. 
Ordinarily, the division is arrived at by a formula under which an 
amount for "fair return on investment" is first deducted from available 
profits and the remainder then divided upon a fixed basis or a sliding 
scale, varying with the amount of profits. Usually labor's share is far 
less than a fifty-fifty cut. Under sliding-scale arrangements, however, 
labor's share goes up rapidly as profits increase. 

The division of labor's share among eligible workers is usually based 
upon seniority. For example, under one plan, employees with five or 
more years of service get full shares in labor's share of the profits, em- 
ployees with three and up to five years' service get two-thirds of a 
share, and those with one and up to three years' service get one-third 
of a share. Under another plan, employees receive a share in profits 
based upon a percentage varying with years of service. Thus employees 



RELATED WAGE PROBLEMS 413 

with one to two years' service receive 5 per cent, and the scale goes up 
so that those with fifteen or more years of service receive 10 per cent 
of their wages as their share of profits. In some cases, seniority is dis- 
regarded, except for a probationary period, after which all share alike 
in the division of profits. 

2. Details of Administration. Details of administration differ 
considerably. How a plan is operated depends, in the first place, upon 
its purpose. If it is used as a means of stabilizing turnover and reward- 
ing seniority, with payments deferred to some future time, the plan 
must be properly qualified under the regulations of the internal revenue 
department. Such deferred distribution plans are called "profit-sharing 
trusts" and, to qualify, must, among other conditions, establish a definite 
formula for contribution to the fund from profits and a formula for 
distribution among participants. If it is intended as a stimulant of 
production, methods of announcing, publicizing, and paying out em- 
ployee shares should be developed carefully. 

Second, administrative details differ because of the degree to which 
profit-sharing plans are tied in with other personnel programs. In most 
companies, profit sharing is intended to be another link of a chain of 
personnel practices; hence its administration is determined by what hap- 
pens to other segments of the program. In other companies, it stands on 
its own legs and what is done in this respect is done with practically 
no regard for the administration of other personnel practices. One com- 
pany, for example, may weave its profit-sharing plan in with pension, 
health, and stock purchase plans, whereas another may set up its plan 
entirely independently of the others, if any. 

3. Relative Merits of Profit-Sharing Plans. Whether or 
not a company should install a profit-sharing plan, as noted earlier, is 
a debatable subject. A number of companies have tried it and have 
discarded it because the employees or employers were dissatisfied with 
results. 1 Yet other companies, with the years, have been more convinced 
that profit sharing is an indispensable tool of labor relations. This 
much can be said, however: A company must have a fairly stable his- 
tory of profits, else the plan is bound to fail. Employees cannot be 
stimulated to greater effort or expected to increase their loyalty to a 
company when there are no profits to divide. Hence profit sharing as 
a device of labor relations should not be viewed with favor unless and 
until steps can be taken to stabilize profits. 

1 P. A. Knowlton, Studies in Profit Sharing (Long Island City: Profit Sharing Re- 
search Foundation, 1953). This contains an excellent analysis of discontinued (as well as 
successful) plans. 



414 PERSONNEL MANAGEMENT 

Moreover, plans that rely upon profit sharing to stimulate individual 
efficiency are proceeding against two fundamentals of wage incentive 
plans. First, remuneration is spaced too far from the effort of em- 
ployees. A plan in which profits are shared in February will scarcely 
possess much stimulating power in July, let us say. Second, the con- 
nection between reward and effort is scarcely discernible. An employee 
may work very conscientiously and get no share in profits because there 
are none in some years. Or he may see a fellow worker loaf and get 
just as much as he does in prosperous years. Hence, profit sharing is 
no stimulant to production. 

On the other hand, as a means of developing team spirit and for 
educating employees in the risks and interdependencies of business, 
profit sharing has much to be said for it. Some companies have noted 
such favorable trends as the following after experience with profit 
sharing: a sharp decline in labor turnover, a greater loyalty to the com- 
pany, a better spirit of co-operation with fewer petty grievances, and a 
generally improved tone of relationships and understanding between 
employee and employer. And it is difficult for an employee to complain 
about excessive profits when he shares in them too. 

Finally, profit-sharing plans will not succeed as a substitute for other 
personnel practices. The companies that have had the most success 
with their profit-sharing plans are those that stress their other personnel 
plans. Thus they note their high wages, savings plans, good super- 
vision, recreational and educational facilities, and grievance-handling 
machinery as parallels of a successful profit-sharing plan. Satisfied with 
good wages, employees are then stimulated to higher efforts by the 
prospects of sharing also in profits. Profit sharing, to repeat, is an added 
element, not a replacement, in the general scheme of personnel manage- 
ment. 

EMPLOYEE OWNERSHIP OF STOCKS 

From time to time interest in employee ownership of stocks waxes 
strong as a means of improving employee and employer relations. The 
usual practice is to allow employees to purchase stock at prices more 
or less reduced from current market levels. The purchases must usually 
be made on a time basis, to encourage the thrift idea and to prevent 
employees from selling at higher prices. Also, the number of shares 
that an employee may buy is restricted by seniority or earning power 
clauses. If an employee leaves the company before stocks are paid for, 
most plans provide for the employee to receive the amount of the pay- 
ments, plus interest usually computed above current rates. 



RELATED WAGE PROBLEMS 415 

Stock plans are preferred by some because employees are made 
partners of the business in name as well as in fact. It